By Dan Williams and Marcus George
JERUSALEM/DUBAI (Reuters) - Talks this week on Iran's nuclear standoff with the West will resume in Istanbul, Iranian media said, while the U.S. and its allies look set to demand an end to high-level uranium enrichment and the closure of a facility built deep under a mountain.
Friday's return to negotiations after a year of tightening sanctions over what the West believes is a program to develop nuclear weapons had been in doubt after Iran and the P5+1 countries - the United States, Britain, France, Russia, China and Germany - released conflicting statements about the venue.
Tehran had voiced concerns about holding them in Turkey, whose opposition to President Bashar al-Assad has angered the Islamic Republic.
"After weeks of debates, Iran and the six world powers agreed to attend a first meeting in Istanbul," the semi-official Fars news agency reported, citing unnamed sources. State-run English language Press TV carried the same report.
The Fars news agency also said the sides had agreed to a second round of talks in Baghdad if there was progress in Turkey. There was no immediate comment from the world powers.
The New York Times on Saturday cited U.S. and European diplomats as saying the United States and other Western nations planned to demand that Iran immediately close and ultimately dismantle a recently completed nuclear facility under a mountain near the Shi'ite Muslim holy city of Qom.
They will also call for a halt in the production of 20-percent enriched uranium and the shipment of existing stockpiles out of Iran, the newspaper said.
Iran says its program is for power generation and producing isotopes for medical purposes, but the U.N. Security Council has demanded a full suspension of enrichment, both to the 20 percent and the 3.5 percent level.
Iran has enough 3.5 and 20 percent-enriched uranium for around four bombs if refined further to about 90-percent purity, Western experts say.
Earlier on Sunday, Israel, which has also demanded an end to all enrichment and has threatened attacks on its arch-foe's nuclear facilities if diplomacy fails, signaled it would accept, as a first priority, the Western powers focusing on stopping 20-percent enrichment.
"We told our American friends, as well as the Europeans, that we would have expected the threshold for successful negotiations to be clear, namely that the P5+1 will demand clearly that - no more enrichment to 20 percent," Israeli Defense Minister Ehud Barak said in an interview with CNN's Fareed Zakaria GPS to be aired on Sunday.
Iran's stocks of 20 percent-pure uranium should be removed "to a neighboring, trusted country", Barak said, according to an advance transcript of the interview.
EASE THE DEADLOCK
While Iran says it has a sovereign right to peaceful nuclear technology, it has at times appeared more flexible regarding 20 percent enrichment, which it began in early 2010, and some experts say that initially getting Iran to stop this higher-grade work could open a way to ease the deadlock.
It is not clear what Iran would expect in return, but an easing of some of the sanctions, which include an oil embargo by the European Union, might be among them.
Asked about Barak's comments to CNN, another Israeli official confirmed that Prime Minister Benjamin Netanyahu's government was focusing lobbying efforts on Iran's 20-percent pure uranium, but said the long-term goal remained the ending of all its enrichment work.
"The understanding that has emerged in our contacts with the powers is that there should be a staggered approach," the official told Reuters on condition of anonymity.
There was scant encouragement from Iran to signal it was ready for concessions.
The head of its parliamentary committee for national security and foreign policy, Alaeddin Boroujerdi, said late on Saturday that the Western powers would soon have to accept the reality of the country's nuclear advances and warned that "confronting the Islamic Republic will not be to their benefit".
"Honorable Iran will continue the debate about peaceful nuclear energy, and that moment isn't far away when the world will see that arrogant countries, led by America and Europe, will accept the reality of nuclear advances and Iran's membership into the nuclear club."
He added that despite the climate of threats and sanctions, Iran had made great progress in its nuclear capability and was proficient in all stages of enrichment from mining raw uranium in Iranian mines, producing yellow cake (concentrated uranium powder), building centrifuges and injecting uranium gas into them.
In February Iran announced it had loaded domestically made fuel rods into the Tehran Research Reactor, which produces radio isotopes for medical use and agriculture.
International sanctions are aimed at depriving the regime of funds and technology to further the nuclear program and are squeezing its vital oil exports and government finances.
(Writing by Will Waterman; Editing by Giles Elgood)