BRUSSELS (AFP) -Membership talks to open despite differences over whale hunting and the bank collapse.

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The European Union will open negotiations next week with Iceland over the north-Atlantic island nation's membership, diplomatic sources said on Thursday.

EU foreign ministers are set to rubber-stamp Monday the order for the bloc's Belgian chair to formally begin Tuesday the painstaking process of harmonising laws and policies, building up to membership, they said.

Leaders agreed at a June 17 summit in Brussels to extend an invitation to the membership process to Iceland.

This was despite differences with Iceland over whale hunting and a bank collapse that hit British and Dutch investors.

Iceland, already formally linked to the EU economy, would be in line to become the 29th member state after Croatia, which has said it hopes to wrap up talks by the end of the year and become a member by 2012.

Reykjavik's 300,000 population would still have to agree to joining the EU via a referendum.