GENEVA, (Reuters) – Six world powers began their first talks with Iran in more than a year on Monday, hoping the meeting will lead to new negotiations over a nuclear programme the West believes is aimed at making atomic bombs.

On the eve of the meeting in Geneva, Iran announced what it called a major step forward in its nuclear work, signalling it is not about to back down in a long-running battle over what it insists are peaceful plans for energy production.

The six powers – Britain, China, France, Germany, Russia and the United States – played down expectations of a major breakthrough during the Dec 6-7 discussions.

Diplomats said an agreement to meet again for more substantial talks, perhaps early next year, would be a sign of progress.

The atmosphere at the start of the meeting, led by Iranian nuclear negotiator Saeed Jalili and EU foreign policy chief Catherine Ashton on behalf of the six powers, was not too tense, said one diplomat involved in the talks.

Officials will break for lunch – an opportunity for smaller meetings on the side, but it is unclear whether Iran and the United States will hold bilateral talks. The meeting will resume in the afternoon and probably continue on Tuesday, he said.

Western powers want Iran to suspend uranium enrichment activity, which can produce fuel for nuclear power reactors or provide material for bombs if refined to a higher degree.

A European official said the six powers expected Iran to shed light on questions about its nuclear programme that had so far gone unanswered.

“The choices are clear for Iran: it can face growing isolation or cooperate,” the official, who asked not to be named, told Reuters.

IRAN REMAINS DEFIANT

But Iranian President Mahmoud Ahmadinejad said last week the key topic of enrichment was not on the agenda at Geneva. Ahmadinejad accused the West of double standards.

“You have a thousand A-bombs, (so) how is it that you are worried that Iran might be able to develop atomic bombs in three years’ time?” he asked in comments on his website on Monday.

“The United States launched wars in Iraq and Afghanistan, but did not use atomic bombs because the era of using nuclear bombs has come to an end,” he said.

Ali Baqeri, deputy head of Iran’s delegation, said the talks would go beyond the nuclear issue and include regional security, Iraq, Afghanistan, drug smuggling and terrorism.

The West has tightened sanctions on Iran in recent months, and Western diplomats say these are hurting Iran’s oil-dependent economy. But Baqeri denied this pressure was having any effect.

“There is no other choice but to hold talks … These talks can pave the way for interaction,” he told Iran’s state news agency.

The United States has warned of more pressure and isolation if Tehran continues its uranium enrichment activities. Washington says all options, including military, remain on the table and Iran’s arch enemy Israel has also not ruled out a military strike if diplomatic efforts fail.

Tehran’s Gulf Arab neighbours are also worried about a potentially nuclear armed Iran and Saudi Arabia has repeatedly urged the United States to bomb Iranian nuclear facilities, according to leaked U.S. diplomatic documents.

Iran’s hardline rulers, seeking to rally nationalist support and distract attention from economic woes, remain defiant.

On Sunday, Iran’s nuclear energy chief Ali Akbar Salehi said Iran would use domestically produced uranium concentrates, known as yellowcake, for the first time at a key nuclear facility, cutting reliance on imports of the ingredient for nuclear fuel.

The timing of the announcement appeared aimed at showing Tehran’s determination to pursue its nuclear plans before talks.

Last week’s killing of an Iranian nuclear scientist in Tehran, which Iran has blamed on Western intelligence services, could cloud the atmosphere for dialogue in Geneva.

“Americans are worse than the most dictatorial dictators,” Ahmadinejad said. “They assassinate nuclear scientists because they are not strong enough to counter the Iranian nation, and think a nation will step back with the assassination of its loved ones.”