Iran and six powers returned to the negotiating table on Friday with only two months left to overcome hurdles in the way of a deal on curbing Tehran's nuclear program.

No major breakthroughs are expected at the talks, which are to continue until the end of next week, but the pressure is on both sides to find ways to narrow the gaps.

EU foreign policy chief Catherine Ashton sat down with Iranian Foreign Minister Mohammad Javad Zarif at UN headquarters to kick off the talks, with negotiators from six powers of the so-called P5+1.

It was the first meeting between Iran and P5+1 -- Britain, China, France, Russia, the United States plus Germany -- since July, when they decided to extend the deadline for a deal to November 24.

But, on the eve of the talks, a senior US administration official downplayed expectations, warning: "It's tough, very tough."

"Coming into New York, I think many of us were not optimistic," said the official, who asked not to be identified. "But it is clear that everyone has come here to go to work."

Iran has long denied it is seeking to develop a nuclear bomb, but the West is demanding Tehran agree to monitoring while scaling back production of fissile material that could be used for bomb-making.

Negotiators say there are major hurdles to overcome but that holding talks in New York on the sidelines of the UN General Assembly will allow for some high-powered diplomacy to come into play.

A ministerial-level meeting of the P5+1 with Iran is expected next week and US Secretary of State John Kerry is scheduled to hold bilateral talks with Zarif.

Last year US President Barack Obama held a historic phone call with Iranian President Hassan Rouhani, the first direct talks since the 1979 Islamic Revolution, but no contact is planned this time around.

Both leaders face strong domestic pressure to take a hard line on the nuclear issue, which had been a diplomatic headache for more than a decade until the process lurched into life last year.

"This is an opportunity, because everybody's here," said the US official. "So we ought to make use of that to try to deal with all of these tough issues."

The meeting at UN headquarters is held against the backdrop of a US-led campaign to confront Islamist fighters in Iraq and Syria, where Iran wields influence as a key regional power.

German Foreign Minister Frank-Walter Steinmeier said the nuclear talks were entering a "crucial phase".

"There is no more room for Iran to play for time. We are willing to offer Iran a fair deal. However, for that to happen, Iran will need to move on the core issues."

- Preventing 'break out' -

Western nations agreed to lift some sanctions against Iran last year in exchange for agreement from Tehran to curb some nuclear activities and to get to work on a comprehensive agreement.

Negotiators failed to meet a deadline of July 20, but all parties agreed to extend the agreement to November 24 in the hope of getting a final settlement.

While the sides have not ruled out the possibility of another extension, the focus is clearly on beating the clock with a deal by the end of November.

The main sticking point remains Western concern over Iran's capacity to enrich uranium, a process that can make fuel for peaceful nuclear uses but also the core of an atomic bomb.

Discussions have revolved around scaling back Iran's uranium enrichment capacity to prevent Tehran from "breaking out" and producing a nuclear weapon.

Ahead of the meetings in New York, US Under Secretary of State Wendy Sherman, the lead US negotiator, warned Iran to get serious about negotiating, saying the status quo was not acceptable.

"We remain far apart on other core issues, including the size and scope of Iran's uranium enrichment capacity," Sherman said.