Talks have resumed in Geneva between Iran and the five permanent UN Security Council members and Germany to discuss a deal under which Tehran would suspend parts of its nuclear program in exchange for limited sanctions relief.

Iran denies allegations by Western powers and their allies that it is seeking the capability to produce atomic weapons and insists its nuclear ambitions are limited to the peaceful generation of electricity.

The US, Russia, China, France, Britain, and Germany came close to winning concessions from Tehran in the last round of negotiations two weeks ago.

Several Western diplomats said there was a good chance US Secretary of State John Kerry would join the group in Geneva in another attempt to nail down a deal. 

"Lots of progress was made last time, but considerable gaps remain, and we have to narrow the gaps," said a senior Western diplomat.

Under discussion is an Iranian suspension of some sensitive nuclear activities, above all medium-level uranium enrichment, in exchange for modest sanctions relief - releasing some funds frozen in foreign accounts, allowing trade in precious metals, the US relaxing pressure on other countries not to buy Iranian oil, and other measures.

The Iranians have made clear, diplomats in the talks say, that they are most interested in resuming oil sales and getting respite from restrictions on Iranian banking and financial transactions that have crippled the economy.