(Reuters) -

Iran appears ready to scale back activity of potential use in making nuclear bombs, suggesting it is willing to compromise for a deal to win relief from harsh economic sanctions, diplomats said on Wednesday, and follow-up talks will be held on November 7-8.

In a rare joint statement highlighting the dramatic shift from confrontation to dialogue since a moderate Iranian president took office in August, chief negotiators from Iran and six world powers said Tehran's new proposal aimed at defusing longstanding suspicions over the nature of its nuclear program was an "important contribution" now under careful consideration.

Details of Iran's proposals, presented during two days of nuclear negotiations in Geneva with the powers, have not been released, and Western officials were unsure whether Tehran was prepared to go far enough to clinch a breakthrough deal.

In a clear sign of hope, however, European Union foreign policy chief Catherine Ashton said it was agreed to hold the next round of negotiations in three weeks in Geneva, and Iran's chief negotiator praised this week's meetings as "fruitful".

Diplomatic paralysis and talk of war reigned during the eight-year tenure of Iranian President Mahmoud Ahmadinejad, a bellicose hardliner. But the door to serious talks opened in June with the landslide election of Hassan Rouhani on a platform of conciliation to ease Iran's international isolation.

Iran and the United States, Russia, China, France, Britain and Germany began negotiations in earnest on Tuesday to defuse the increasingly volatile stand-off shadowing the Middle East.

The powers want the Islamic Republic to stop higher-grade uranium enrichment to allay concerns that it would provide Iran a quick path to bomb-grade nuclear fuel. Iran says it is refining uranium only to generate more electricity for a rapidly expanding population and to produce isotopes for medicine.

The joint statement, read out by Ashton, said Iran's foreign minister "presented an outline of a plan as a proposed basis for negotiation" and said the talks were "substantive and forward looking," without elaborating.

Ashton, presiding over the talks on behalf of the powers, told a closing news conference that the discussions were "the most detailed we have ever had, by, I would say, a long way." The two sides had agreed that nuclear and sanctions experts would convene before the next high-level negotiations.

Iranian Foreign Minister and chief negotiator Mohammad Javad Zarif said Tehran looked to a new era in diplomatic relations. "We sense that members of the (six powers) also have exhibited the necessary political will in order to move the process forward. Now we need to get to the details," he told reporters.

"DETAILED, STRAIGHTFORWARD TALKS"

A senior U.S. administration official enthused over the substantive quality of the talks. "I've been doing this now for about two years," the official said on condition of anonymity. "And I have never had such intense, detailed, straightforward, candid conversations with the Iranian delegation before."

The official added: "Although there remain many differences in each area, and what sanctions relief might be appropriate, specific and candid discussions took place."

After Tuesday's initial round, Iranian Deputy Foreign Minister Abbas Araqchi suggested Tehran was prepared to address long-standing calls for the U.N. nuclear watchdog to have wider and more intrusive inspection powers.

He also told the official IRNA news agency that measures related to its uranium enrichment were part of the Iranian proposal, but hinted the Islamic Republic was not inclined to make its concessions quickly.

"Neither of these issues are within the first step (of the Iranian proposal) but form part of our last steps," he said without elaborating, in comments reported on Wednesday.

The sequencing of any concessions by Iran and any sanctions relief by the West could prove a stumbling block en route to a landmark, verifiable deal. Western officials have repeatedly said that Iran must suspend enriching uranium to 20 percent fissile purity, their main worry, before sanctions are eased.

Britain said it hoped this week's talks would lead to "concrete" results but that Iran must take the initiative. "Iran will need to take the necessary first steps on its program and we are ready to take proportionate steps in return," Foreign Secretary William Hague said in a statement.

Russia warned against undue optimism after the October 15-16 talks. "The result is better than in Almaty (talks held in April) but does not guarantee further progress," Sergey Ryabkov, Russia's deputy foreign minister and Iran negotiator, told Interfax. "There could have been better cooperation."

Israel, Iran's arch-foe, had urged the powers to be tough in the talks by demanding a total shutdown of enrichment and ruling out any early relaxation of sanctions. But it did not repeat veiled threats to bomb Iran if it deems diplomacy pointless.

HESITATION

Western diplomats were hesitant to divulge specifics about the negotiations due to sensitivities involved - both in Tehran, where conservative hardliners are skeptical about striking deals that could curtail the nuclear program, and in Washington, where hawks are reluctant to support swift sanctions relief.

But Iran, diplomats said, has made much more concrete proposals than in the past, when ideological lectures and obfuscations by Tehran were the norm, to the point that Iranian negotiators were worried about details being aired in public before they had had a chance to sell them back in Tehran.

Zarif said earlier in a post on Facebook that secrecy was working in the negotiators' favor. "Normally, the less negotiators leak news, the more it shows the seriousness of the negotiations and the possibility of reaching an agreement."

Diplomats said other proposals Iranian envoys had made regarding eventual "confidence-building" steps included halting 20 percent enrichment and possibly converting at least some of existing 20 percent stockpiles - material that alarms the powers as it is only a short technical step away from weapons-grade - to uranium oxide suitable for processing into reactor fuel.

COMPLETE HALT TO ENRICHMENT OUT OF QUESTION

But Iran did not intend to renounce all enrichment itself "under any circumstances", the Russian state news agency RIA quoted an unidentified Iranian delegation source as saying.

He was dismissing the maximal demand of U.S. and Israeli hawks which Western diplomats concede would undermine Rouhani's authority at home by exposing him to accusations of a sell-out from conservative hardliners in the clerical and security elite.

Most Iranians of whatever political persuasion equate the quest for nuclear energy with national sovereignty, modernization and a standing equal to the Western world.

"Apart from suspending 20 percent enrichment, it is possible to consider a scenario involving reducing the number of centrifuges (enriching uranium)," RIA quoted the delegate as saying. "However, for this, concrete steps from our opponents are required, which we do not see yet."

Iran has sharply expanded its uranium enrichment capacity in recent years and it now has roughly 19,000 installed such machines. Of those, about 10,400 are currently enriching.

The fact that Iran has so many idle centrifuges potentially allows it to swiftly expand enrichment, if it wanted, or to use them as a bargaining chip in negotiations with the powers.

Rouhani's election in June turned Western pessimism into guarded optimism that Iran might be ready to do a deal before tensions escalated uncontrollably into armed conflict.

The sprawling Shi'ite state of 75 million people has become anxious to be rid of Western-led sanctions that have impaired its economy, slashed its critical oil export revenues by 60 percent and brought about a devaluation of its rial currency.

Iran has previously spurned Western demands that it shelve 20 percent enrichment as an initial step in return for modest sanctions relief encompassing, for example, imported aircraft parts. Instead, it has called for the most far-flung and painful sanctions, targeting oil and banking sectors, to be rescinded.

(Additional reporting by Fredrik Dahl, Yeganeh Torbati, Justyna Pawlak and Stephanie Nebehay in Geneva, Marcus George in Dubai, Kiyoshi Takenaka in Tokyo and Alexei Anishchuk in Moscow; Editing by Mark Heinrich)

By Louis Charbonneau and Yeganeh Torbati