Talks in Baghdad resumed on Thursday between Iran and world powers.

The topic is Tehran's nuclear programme, which the West suspects is aimed at nuclear bomb research.

Iran maintains its program is peaceful, and is only for power generation and medical uses.

Consisting of the five permanent members of the U.N. Security Council - the United States, Russia, China, France and Britain - as well as Germany, the P5+1 talks follow a 15-month diplomatic freeze.

According to a U.S. official, the first day of talks showed a "fair amount of disagreement" but also areas of common ground.

Western diplomatic sources say an upcoming U.N. watchdog report is due to show Iran has brought online more uranium enrichment centrifuges.

That, fears the West, will provide more material for atomic weapons.

The conference in the Iraqi capital is being closely watched by international energy markets.

They remain nervous over extended sanctions imposed on Iran's crude exports, as well as the spectre of a Middle East conflict arising from possible Israeli strikes against Iran's nuclear installations.

Travis Brecher, Reuters