BRUSSELS, May 23 (Reuters) - The European Union is preparing sanctions against Iran's biggest bank but wants to see how Tehran responds to a new offer by major powers on its nuclear programme before acting, diplomats said on Friday.

An EU diplomat said the 27-nation bloc was making legal and technical preparations for an asset and funds freeze on state-owned Bank Melli -- a measure long sought by the United States to raise pressure on Iran to halt uranium enrichment.