World powers are seeking more consensus with Iran at the Baghdad talks after Teheran agreed "in principle" to permit nuclear watchdog inspectors to investigate a key site.

Representatives of the five permanent members of the UN Security Council, plus Germany, arrived in the Iraqi capital, Baghdad, on Wednesday for the two-day talks.

The main concern of the meeting is Iran's production of uranium enriched to 20 percent, which is far higher than needed for regular energy-producing reactors. Iran says it needs it for medical research.

Yukiya Amano, director-general of the International Atomic Energy Agency, said on Tuesday that Iran agreed, in principle, to allow UN inspectors to restart probes into the Parchin military site. This site is suspected of being used for tests related to the development of nuclear weapons.

Foreign Ministry spokesman Hong Lei on Wednesday welcomed the efforts from Iran and the IAEA, and called for more dialogue and cooperation between the two sides.

The tentative agreement over Parchin is likely to be used by Iran as added leverage to seek concessions from the West on sanctions, The Associated Press said.

Washington remains cautious, saying that the proposed agreement marked a "step forward" but that Teheran would be judged on its actions.

"We're not at the stage of negotiating what Iran would get in return for fulfillment of its obligations," said White House Press Secretary Jay Carney.

The US would "continue to move forward with the sanctions that will be coming on line as the year progresses", he said.

On Monday, the US Senate backed proposals for further sanctions on Iran, including requiring companies listed on US stock exchanges to disclose any Iran-related business. US and European measures already have targeted Iran's oil exports - its chief revenue source - and banking industry.

Vice-Foreign Minister Cheng Guoping on Wednesday reiterated the importance of observing UN resolutions and the peaceful resolution of the Iranian nuclear issue.

"But we oppose sanctions that are against UN resolutions and international law.

"Chinese companies have normal and transparent business relations with Iran. These relations do not contravene the relevant US resolutions, neither do they harm the international community," Hong said.

US officials have said Washington will not backpedal from its stance that Iran must fully halt uranium enrichment.

Both Iran and the West are willing to talk about the 20 percent enrichment, especially Iran, whose economy has been hit by the sanctions, said Yao Kuangyi, former Chinese ambassador to Turkey.

If the IAEA and the six powers at the Baghdad talks agree that Iran has the right to enrich uranium up to 3.5 percent for civilian use, Iran will probably cease aiming for 20 percent, Sadeq Zibakalam, a professor of political science at Teheran University told Xinhua News Agency.

If Iran does agree, it will definitely ask for some Western sanctions to be lifted, Zibakalam said. "That may be a kind of solution."

Xinhua, Reuters and AP contributed to this story.

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