President Mohammad Khatami flew home Wednesday amid speculation that Iran might pull back from its death sentence against British author Salman Rushdie.

At a news conference Tuesday in New York, Khatami suggested that Iran wanted to put the Rushdie affair behind it, saying Iran considered the matter "completely finished."Rushdie has been in hiding since 1989 when the late Iranian leader Ayatollah Ruhollah Khomeini issued a "fatwa," or religious edict, saying he should be punished for blasphemy against Islam for his book "The Satanic Verses."

Khatami noted that his government already pledged not to enforce the decree, saying: "Iran has officially declared that in action, it has no decision on this matter."

In London, the Guardian newspaper said Iranian Foreign Minister Kamel Kharazzi would make clear in a meeting with Britain's foreign secretary that Iran was pulling back from Khomeini's edict.

The Guardian report said in a bid to improve relations with Britain, the Iranian government would ask a religious foundation that has offered a $2.5 million reward for Rushdie's death to cancel the reward.

Any steps that Khatami might take to reduce the impact of the edict against Rushdie are likely to be opposed by hard-liners in Iran.