Iran and six world powers ended talks Tuesday with an agreement to meet again early in the new year, suggesting Tehran may be ready to address international demands that it discuss nuclear activities that could be used to make weapons.

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Iran's chief negotiator, Saeed Jalili, centre, enters his car after a brief interview with Iranian Television in Geneva, Switzerland, on Tuesday. ((Anja Niedringhaus/Associated Press))

Catherine Ashton, the European's Union's foreign policy chief, said the agreement was reached after "two days of substantive talks.

"We and Iran agree to a continuation of these talks in late January in Istanbul," said Ashton, speaking on behalf of the United States, Russia, China, Britain, France and Germany.

Ashton had previously rejected Tehran's preference for a meeting in Istanbul, where Iran would have Turkish allies on the sidelines.

She declined to go into details saying only: "We recognize Iran's rights but insist it fulfills its obligations."

While the six powers accept Iran's right to develop nuclear power they insist that Tehran meet United Nations Security Council demands to stop uranium enrichment and other activities that have both peaceful and military applications.

At the Istanbul meeting, "we plan to discuss practical ideas and ways of co-operating toward the resolution of our full concerns about the nuclear issue," Ashton told reporters shortly after the second day of talks ended around noon.

Saed Jalili, Iran's chief nuclear negotiator, confirmed the timing and venue of the planned talks, while serving notice his country would not bend from its insistence that it has a right to enrich uranium for peaceful purposes.

"We reject the idea of talks under pressure," he told reporters. Avoiding any mention of nuclear issues, he would only say the talks will be "on the issue of co-operation" between Tehran and the six powers.

In Iran, President Mahmoud Ahmadinejad said lifting the UN sanctions and others would help achieve progress in talks.

"If you come to talks with sincerity, loyalty to the law, friendship and respect for the definite rights  of the Iranian nation, and then cancel the wrong mistakes you took — which didn't have any impact on the Iranian nation — and cancel resolutions, sanctions and some restrictions that you imposed, it will definitely be helpful," state TV's website quoted Ahmadinejad as saying.

Tehran says it does not want atomic arms and insists its nuclear program is only designed to provide more power for its growing population. But it is under four sets of Security Council sanctions for refusing to freeze enrichment, which can be used to make fuel for reactors as well as fissile warhead material.