Italy has signed a contract with Iraq to supply its Tuwaitha Research Center with a number of nuclear laboratories, including a lead-shielded "hot cell" to use remote control devices to separate radioactive isotopes.

State Department sources said that Italy had assured the United States that Iraq intends to use the hot cell to manufacture radioisotopes for medicine and industrial use although the same sources said the hot cell conceivably could be used to handle small traces of plutonium that over time could be made into a nuclear bomb.

One source pointed out that Iraq would still need a large chemical separation plant to extract plutonium from spent nuclear fuel before assembling a bomb.

"The Italians have not sold Iraq a chemical separation plant to extract plutonium from spent fuel," the source said. "That would be of far more concern to us."

France has already sold Iraq a nuclear research reactor to produce the isotopes that will be handled in the hot cell. Two years ago, the reactor vessel was bombed in a Paris suburb just before it was to be shipped to Iraq, presumably by Israelis attempting to stop the shipment.

The reactor vessel was subsequently repaired and was believed shipped to Iraq. The contract to supply Iraq with the high-enriched uranium that will fuel the reactor was signed not long ago, suggesting the fuel will be shipped there soon.

While high-enriched uranium can be used to make a nuclear bomb, it also rapidly produces plutonium as it burns and becomes spent fuel.

"The reason there's some concern about Iraq's intentions," one State Department source said, "is the way they are going about buying all this nuclear equipment. You have to be at least a little suspicious about it."

While Iraq signed the 1968 Non-Proliferation Treaty prohibiting the spread of nuclear weapons, there is a lingering fear among U.S. nuclear weapons experts that the Arab nation might attempt to make nuclear weapons on the assumption that Israel already has made them.