Ali Hosseini-Tash, the deputy secretary of Iran's Supreme National Security Council, said the negotiations in Moscow had been positive and "give us the hope of reaching an agreement."

"The main question is the creation of a more normal situation and to reduce this tension so that we won't have people making unreasonable demands of each other," he said before leaving for Iran.

But Russian Foreign Minister Sergei Lavrov was markedly more cautious.

"I think it would be premature to use terms such as failure or success," he told reporters.

Russia, as a veto-wielding member of the UN Security Council with traditionally close ties to Iran, has long tried to mediate in the long-running dispute over its partner's nuclear program. Its proposal is to create a joint venture that would enrich uranium for Tehran's energy needs on Russian soil.

Russia sees it as a means of getting Iran to reinstate its moratorium on uranium enrichment work, after Tehran broke seals at three nuclear facilities last month and signaled its intention to resume nuclear work.

Iran stresses talks with Russia, not EU

The proposal by Moscow has been cautiously welcomed by Western countries, which suspect Iran's stated intention to develop peaceful nuclear energy is simply a cover for developing atomic weapons.

Iranian officials have also hinted that they attach greater significance to negotiations with Moscow rather than with the EU troika of Germany, France and Britain who have been holding on-and-off talks with Teheran for over two years.

"Our contacts with the European Union will for the moment not be held only with the EU-3, but also in a unilateral manner with the different countries of the European Union," Mottaki told reporters following talks on Monday with EU officials in Brussels.

German Foreign Minister Frank-Walter Steinmeier said on a visit to Japan that diplomacy can still work in resolving the Iranian nuclear standoff even though economic sanctions cannot be ruled out.

"The issue of a military option does not arise," Steinmeier told a news conference. "We must show imagination and take advantage of different diplomatic possibilities."

"I do not believe economic sanctions are imminent. But we cannot completely rule out imposing sanctions," he said.

Russians to visit Iranian nuclear plant

Russian negotiators continued to press Iran at the talks to stop enrichment work, Russian foreign ministry spokesman Mikhail Kamynin said.

Moscow called on Iran "to return to a moratorium regime on all types on work on uranium enrichment including scientific research and construction work," Kamynin was quoted by the official ITAR-TASS news agency as saying.

The talks in Moscow are to be followed up with a visit to Iran on Thursday by the head of Russia's atomic energy agency Rosatom, Sergei Kiriyenko. He is due to meet senior Iranian officials and to visit a nuclear power station that Russia is building for Iran at Bushehr, in southern Iran.

However Iran has shown no sign of willingness to restore a moratorium on uranium enrichment at home, a key demand of the West.

Iran has been reported to the UN Security Council over its nuclear activities, and a March 6 meeting of the UN's International Atomic Energy Agency will be vital in determining how the world body responds.

Moscow has repeatedly cautioned against a possible imposition of sanctions.