ISTANBUL (Reuters) - Iran and six world powers prepared on Friday for rare talks aimed at easing fears that a deepening dispute over the Islamic Republic's nuclear program could plunge the Middle East into a new war. Senior officials from Iran and the big powers arrived in Istanbul ahead of Saturday's talks which are aimed at restarting stalled diplomacy after months of soaring tension and persistent speculation that Israel might bomb Iranian nuclear sites. The meeting is widely seen as a chance for the countries involved - the United States, France, Russia, China, Britain and Germany - and Iran to halt a downward diplomatic spiral and to seek ways out of years of deadlock. Western diplomats have expressed cautious optimism that Iran, which is OPEC's second-biggest oil producer but has seen its economically vital exports squeezed by increasingly tough sanctions, may finally be ready to discuss curbs to its nuclear program to relieve the pressure. But Iran's English-language state TV station, Press TV, cited sources close to Iran's delegation as saying Tehran saw "few encouraging points" in remarks from U.S. and European officials. Iran has promised to put forward "new initiatives" in Istanbul, and continues to say its nuclear program is peaceful. It has repeatedly ruled out suspending it. Diplomats and analysts played down any expectations of a major breakthrough in the meeting, but said it might pave the way for further negotiations to resolve the decade-long row. Some said an agreement to hold the next round would be reached on Saturday if Iran proposed an agenda that convinced the six powers it was serious about discussing its nuclear work, something it has refused to do in the past without a substantial easing of international sanctions. Western officials have made clear their immediate priority is to convince Tehran to cease higher-grade uranium enrichment, which it began in 2010. Iran has signaled some flexibility over halting its enrichment to a fissile purity of 20 percent - compared with the 5 percent level required for nuclear power plants - but has also suggested it is not ready to do so yet. "If 20 percent is off limits, that would undermine our confidence," one diplomat said, although he also underlined that Iran was unlikely to offer concessions on the issue on Saturday. Analysts say negotiations could take months, taking some pressure off oil prices and lowering the chances of an Israeli strike. But in the end, some said, renewed diplomacy is unlikely to yield a resolution to the crisis, which has helped push global oil prices higher this year. If Iran were to agree to scale back its uranium enrichment program, it would probably expect to be rewarded with a relaxation of sanctions, for example the lifting of an EU oil embargo due to take full effect in less than three months' time. Iran's deputy negotiator Ali Baqeri held separate talks with senior Chinese and Russian officials in Istanbul, while the six powers met separately to coordinate tactics. Quoted by Iran's official news agency IRNA, Russian Deputy Foreign Minister Sergei Ryabkov said there was still no concrete proof Iran's nuclear work had a military dimension. In comments that underlined continuing differences in the six powers' positions, Ryabkov also spoke out against U.S. sanctions that have forced many other countries to reduce their trade with Iran. "Russia condemns all aspects of unilateral sanctions," IRNA quoted him as saying before his meeting with Baqeri. It is an approach that, if implemented, ignores the legitimate rights of other countries and companies that want to have lawful agreements with (the) Iranians. Formal talks between Iranian chief nuclear negotiator Saeed Jalili and European Union foreign policy chief Catherine Ashton, the powers' main representative, will get under way on Saturday around 0700 GMT, but Ashton and Jalili also met over dinner on Friday. The last time the two sides met, also in Istanbul in January last year, they were unable to even agree on an agenda. This time, both sides signaled in the run-up to Saturday's talks that they intended to give diplomacy a real chance. "We hope that this first round will produce a conducive environment for concrete results through a sustained process," Ashton's spokesman, Michael Mann, said. In a rare opinion piece in a U.S. newspaper, Iranian Foreign Minister Ali Akbar Salehi said his country hoped that all sides would commit to comprehensive dialogue and that negotiators would make "genuine efforts to re-establish confidence and trust." Defying intensifying sanctions, Iran has continued to expand its uranium enrichment program - activity which can serve both energy and military purposes - and experts say it now has enough material for four atomic bombs if processed much further. Mark Fitzpatrick, a director of the International Institute for Strategic Studies think tank, said getting Iran to halt 20 percent enrichment would be an interim goal "to put a lid on the most troublesome" aspect of its nuclear program. A long-term deal would have to "provide confidence that Iran cannot quickly produce nuclear weapons," he told Reuters, adding this would require both better monitoring of Iran's nuclear work and limits on its uranium enrichment and stockpiles. Additional reporting by Marcus George, Zahra Hosseinian, Jonathon Burch, Alexandra Hudson, Ayla Jean Yackley and Ece Toksabay; Editing by Mark Heinrich and Andrew Osborn