Iran sees U.S. respect but says no nuclear retreat

It did not mention a call for Iran to freeze its nuclear work in return for halting steps towards more U.N. sanctions, which is what world powers proposed to prepare for formal talks.

"The parties will abstain from referring to or discussing divergent issues that can potentially hinder the progress of negotiations," the Iranian paper said, according to the report posted on the Times' Web site on Tuesday.

Iran says its nuclear work is a peaceful drive to generate electricity so the country, the world's fourth-largest crude producer, can export more of its oil and gas.

It has repeatedly ruled out suspending uranium enrichment, as the powers say it must do before formal negotiations on their offer can start. Enriched uranium can provide fuel for power plants but also material for weapons if greatly refined.

(Writing by Fredrik Dahl and Edmund Blair; Editing by Janet Lawrence)