IRAN accused world powers yesterday of creating "a difficult atmosphere" hindering talks on its atomic energy programme, signalling a snag in diplomacy to ease a stand-off over fears of a covert Iranian effort to develop nuclear bombs.

The nub of the dispute was not immediately clear as the high-stakes negotiations in pursuit of a framework deal to stop a feared drift towards a new Middle East war went into a second day in the Iraqi capital Baghdad.

But Iran had served notice that it wanted immediate relief from economic sanctions as part of any deal to stop higher-grade uranium enrichment, a pathway to nuclear arms, whereas Western powers insisted Tehran must first shut it down.

Washington voiced cautious hope on Wednesday that Iran was finally engaging the powers on detailed, transparent ways of proving its nuclear work, after years of secrecy and evasions of United Nations investigations, would be for peaceful purposes only.

European Union foreign policy chief Catherine Ashton, heading the powers' delegation in Baghdad, met her Iranian counterpart yesterday before the two sides resumed a full plenary session, a Western diplomat said.

However, an Iranian delegate poured cold water on suggestions from Western diplomats that the two sides appeared to be finding common ground on proposals for an outline deal.