Iran's chief nuclear negotiator, Saeed Jalili, has held preliminary talks with Russian and Chinese diplomats, telling them he had come prepared for substantive negotiation.
"All the signs from the Iranians are that they want to be serious and constructive," a source close to the talks said.
Jalili was due to have dinner on Friday with the EU foreign policy chief, Lady Ashton, before a day of negotiations at Istanbul's main conference centre.
Diplomats said they did not expect an immediate deal, but they hoped the talks would open a path towards a diplomatic resolution of the Iranian nuclear crisis and avert the threat of a new war in the Middle East. They said that the benchmark for success would be whether there was enough common ground by Saturday night to justify a second round of talks within the next few weeks.
"Iran will have to show that it is ready for serious engagement," said a diplomat involved in the talks. "Quite what it will look like is something we will have to make a judgment call on. The stakes are pretty high, so it's important to get it right."
Another source at the talks said there had been a string of signals from Tehran that it would be prepared to limit its enrichment of uranium in return for a relaxation of sanctions. At the last round of talks in Istanbul in January 2011, Jalili declared that Iran's nuclear programme was not open to negotiation unless sanctions were lifted first. That was deemed unacceptable by the six-nation group – the United States, Russia, China, Britain, Germany and France – and the talks collapsed.
Since then, the European Union has announced an oil embargo against Iranian imports, and the US has declared sanctions aimed at the international financing of the Iranian oil trade. The punitive measures are not due to take effect for two months but they have already had a profound effect on the Iranian economy, triggering a run on the currency and forcing Iran to sell its oil at a steep discount to its remaining buyers in Asia.
"The strength of the oil sanctions have taken them by surprise. They have really been hit by them," a western diplomat said in Istanbul. Another diplomat at the talks said: "They would not be coming here if they were not serious".
Before arriving in Istanbul, Jalili said he would bring "new initiatives" but he did not specify what. Iran has refused demands from the UN security council to suspend the enrichment of uranium, which can be used for both electric power generation and nuclear weapons.
Two years ago, Iranian scientists started producing uranium at a much higher level of enrichment than for power generation, 20% compared with 3.5%. (The percentages refer to the concentration of the most fissile uranium isotope, U-235).
Tehran said the purer fuel would be used in a research reactor in Tehran for the production of medical isotopes.
However, the move raised tensions dramatically as it brought Iran much closer to a capacity to make weapons-grade uranium. Iran also began making the higher-enriched fuel in a deeply buried plant at the Fordow military site, near Qom, triggering Israeli threats of military action before the Iranian programme could enter what the Israeli defence minister, Ehud Barak, has called a "zone of immunity" from attacks from the air.
Western diplomats at the Istanbul talks said the most likely Iranian offer would be to limit the production of 20% enriched uranium in return for sanctions relief.
They pointed to remarks earlier in the week by the head of the Iranian nuclear programme, Fereydoun Abbasi-Davani, suggesting enrichment could be suspended once Iran had enough material.
It is believed to have enriched enough 20% uranium already to keep the Tehran research running for eight years.
"Our systems are capable of making this change," Abbasi-Davani told the Iranian Students' News Agency.
In a commentary in the Washington Post on Friday, the Iranian foreign minister, Ali Akbar Salehi, suggested any Iranian nuclear concessions would have to be reciprocated by the rest of the international community.
"To solve the nuclear issue, the scope of the upcoming talks … must be comprehensive. The concerns of all sides must be addressed."
If Iran does table a substantive offer, it could bring to the surface longstanding differences among the six nations. At an initial meeting of the six delegations, the Russians recommended lifting some sanctions as a goodwill gesture. But western participants said the international community could not give up its main bargaining chip for nothing in return. European diplomats said that although the EU oil embargo does not take full effect until 1 July, the political decision had been taken and it would be almost impossible to stop.
Ashton's office is uneasy about reports in the US that Washington and its allies would demand the cessation of production of 20% uranium, the export of Iran's 20% stockpile, and the closure of Fordow as an opening position at the Istanbul talks.
That is not the joint policy of the six-nation group, which for now is simply to sound out the Iranians on their willingness to negotiate.
European diplomats say they have been assured by US colleagues that the US reports did not represent their position, and speculated that they reflected posturing for US domestic consumption in an election year.
The US secretary of state, Hillary Clinton, said Washington was "looking for concrete results" from Iran.
"We want them to demonstrate, clearly, in the actions they propose that they have truly abandoned any nuclear weapons ambition," she said. "Of course, in a negotiation, we understand that the Iranians will be asking for assurances or actions from us and we will certainly take those under consideration."
France, which has consistently taken the hardest line of the six-nation group, has expressed concern privately that a deal on 20% uranium could imply that the international community accepted Iran's production of 3.5%-enriched uranium, in contravention of UN security council resolutions.
"We really do not have a common view of what's the real offer to be made to Iran to bring it to serious negotiations," the Russian deputy foreign minister, Sergey Ryabkov, said this week at a meeting in Washington, according to the Washington Post.
