MOSCOW Iran had "intense and tough" talks on Monday with the six world powers concerned about its nuclear program, but there was no clear progress towards ending a decade-long dispute which risks sparking a new Middle East war.
A spokesman for the head of the delegation talking to Iran held out hope for a result on the second, final day of talks.
"We had an intense and tough exchange of views," said European Union foreign policy head Catherine Ashton's spokesman Michael Mann. "We agreed to reflect overnight on each others' positions."
The Moscow talks follow two rounds of negotiations since diplomacy resumed in April after a 15-month hiatus during which the West cranked up sanctions pressure and Israel repeated its threat to bomb Iranian nuclear sites if diplomacy failed to stop Tehran getting the bomb.
During five hours in a Moscow hotel, Iran - which says its nuclear activities are entirely peaceful - insisted on an easing of sanctions and an acknowledgment of its right to enrich uranium, Western diplomats said, conditions that the United States and EU are unlikely to accept.
"We haven't reached an agreement but it is more complex than that. We haven't got to the end the conversation," said one western diplomat present at the talks in the Russian capital.
A series of U.N. Security Council resolutions since 2006 have demanded Iran suspend all its enrichment-related activities due to concerns about the nature of the nuclear program.
Rather than halt enrichment - a process which refines uranium for use as fuel or, if done to a much higher level, nuclear bomb material - Iran has increased its activities.
"A BOMB OR TO BOMB"
New U.S. and EU sanctions come into force in two weeks, Israel has threatened to bomb Iran if no solution to the dispute is found and oil markets are nervous over the prospect of intensifying regional tensions.
"The main stumbling block is that the sides' positions are rather difficult and tough to reconcile," Sergei Ryabkov, a Russian deputy foreign minister and negotiator, told reporters.
Experts said a breakthrough was unlikely, with the six powers - the United States, China, Russia, France, Britain and Germany - wary of making concessions that would let Tehran to draw out the talks and gain the time needed to develop a nuclear weapons capability.
An Iranian diplomat said: "Up to now the environment is not positive at all."
An EU embargo on Iranian oil takes full effect on July 1 and new U.S. financial sanctions some days before that. Iran's crude oil exports have fallen by some 40 percent this year, according to the International Energy Agency.
Further adding to the pressure, Israel - widely believed to be the only nuclear armed country in the Middle East - has said time is running out for any effective air strikes to stop Iran getting the bomb.
Vice Prime Minister Moshe Yaalon said on Sunday Israel "could find itself facing the dilemma of 'a bomb, or to bomb'."
"Should that be the choice, then bombing (Iran) is preferable to a bomb (in Iran's hands)," he said. "I hope we do not face that dilemma."
Western diplomats said one positive sign to emerge from Monday's talks, which included a PowerPoint presentation by Iranian negotiators, was that Tehran was at least willing to discuss their most pressing concern: higher-grade uranium.
In early 2010, Iran announced it had started enriching uranium to 20 percent purity, a level much higher than what is needed for power generation and seen by some experts as a dangerous step towards being able to make bomb material.
"They were very overt, more than they have ever been, in talking about 20 percent (fissile purity uranium) in a detailed and frank way," one Western diplomat said.
In Iran, President Mahmoud Ahmadinejad said Tehran would be prepared to stop enriching uranium to a higher level if the six powers agreed to supply the fuel it needs for a Tehran reactor making medical isotopes.
"From the beginning the Islamic Republic has stated that if European countries provided 20 percent enriched fuel for Iran, it would not enrich to this level," Ahmadinejad said in comments published on the presidential website.
But it is not clear how much influence Ahmadinejad has over the negotiations and whether his remarks reflect Tehran's position. The president, who stands down at elections next year, has fallen out of favor with Supreme Leader Ayatollah Ali Khamenei, the man who has the ultimate decision-making power over the strategic nuclear program.
The six powers want a substantive response to their offer of fuel supplies for Tehran's research reactor and relief in sanctions on the sale of commercial aircraft parts to Iran.
At the last talks, in Baghdad in May, they asked Tehran in return to stop producing higher-grade uranium, ship any stockpile out of the country and close down an underground enrichment facility, Fordow.
Mistrust of Iran remains high. The International Atomic Energy Agency failed to persuade Iran, in talks this month, to let it inspect the Parchin military site where it suspects nuclear bomb-related research took place.
(Additional reporting by Fredrik Dahl in Vienna, Marcus George in Dubai, Thomas Grove in Moscow and Dan Williams in Jerusalem; Writing by Justyna Pawlak and Steve Gutterman; Editing by Timothy Heritage and Robin Pomeroy)