Iran's supreme leader said Sunday he is not optimistic but supports talks with world powers over his country's nuclear drive as the process is incapable of hurting the Islamic republic.

The remarks by the all-powerful Ayatollah Ali Khamenei came ahead of a new round of negotiations with the so-called P5+1 group of world powers in Geneva on November 7 and 8.

"I am not optimistic about the negotiations but, with the grace of God, we will not suffer losses either," said Khamenei.

"I do not think the negotiations will produce the results expected by Iran," he told a group of students at his residence, a day before the anniversary of the takeover of the US embassy in Tehran in 1979.

All decisions on the nuclear programme, which Western powers and Israel suspect is masking a military drive despite repeated Iranian denials, rest with Khamenei.

Next week's talks are aimed at finding a negotiated solution that would remove concerns about Iran's nuclear drive in exchange for an easing of economic sanctions that have provoked soaring inflation.

It will be the second such meeting since Hassan Rouhani, a reputed moderate, took office as Iran's president in August with a stated mandate of lifting the sanctions through constructive engagement.

Khamenei dismissed the notion that submission to Western demands of abandoning Iran's nuclear agenda "would solve all of our problems, including the economic woes".

The White House has spearheaded international efforts to target Iran's vital oil income and its access to the global banking system to coerce it into making concessions in the negotiations, while keeping on the table the threat of military action as a last resort.

And Khamenei criticised the dual approach on Sunday, as the crowd of students chanted "Death to America".

"The Americans smile and express a desire for negotiations; on the other hand, they immediately say that all options are on the table," he said.

'Smiling enemy'

"We should not trust a smiling enemy," Khamenei said, warning Iran's negotiating team of hardened diplomats overseen by Foreign Minister Mohammad Javad Zarif.

Iranian negotiators and P5+1 representatives from the United States, Britain, France, China and Russia plus Germany restarted the talks in Geneva last month.

Both sides said the new push was substantive, with Zarif expressing hope for a "new phase" of relations between Tehran and the international community.

But since then, his team has faced mounting criticism at home from hardliners wary that the negotiators could compromise Iran's nuclear work.

The disapproval peaked in late October when anti-American posters questioning Washington's sincerity in the talks went up on Tehran's streets, before the authorities removed them.

Khamenei on Sunday warned against such criticism, as he expressed support for the negotiators who had a "difficult" task.

"No one should see our negotiating team as compromisers," he said.

"They have undertaken a difficult mission and no one should undermine an agent on a mission."

The administration of US President Barack Obama has said it is important to test the sincerity of Iran's promise to hold serious discussions on its nuclear drive, while promising to keep its allies, including Israel, informed about the process.

Khamenei was also critical of the close US alliance with the Jewish state, whose existence the Islamic republic does not recognise.

"The Americans have the highest indulgence towards the Zionists and they have to. But we do not share such indulgence," he said.

"The Zionist regime is an illegitimate and bastard regime," he said.

His remarks reaffirmed Tehran's position on Israel, which has been toned down since the departure from office of hardline former president Mahmoud Ahmadinejad.