Powell, who spoke with his Iranian counterpart on Monday at an international conference dinner, said the United States could "in due course" hold direct talks and review relations if Tehran addressed concerns over its terrorism links and nuclear programs.

The remarks were sure to fuel speculation over the prospects for a thaw in relations as the administration of President Bush debates whether to engage or confront a country it bracketed in "an axis of evil" with the Democratic People's Republic of Korea and pre-war Iraq.

Asked if the United States could one day consider restoring ties with Iran, Powell, a sometimes lonesome dove in Bush's cabinet, said: "In due course."

"It is not in the best interests of international relations for there to be permanent enmity or animosity between two states," he said.

Powell's appeasing tone came after Iran on Monday met international demands to suspending uranium enrichment activities, which in part have motivated US accusations Tehran is pursuing a nuclear bomb.

While diplomats and political analysts do not expect a breakthrough anytime soon, Powell may have raised hope for the start of a rapprochement with a country that regards the United States as the "Great Satan."

Some European diplomats acknowledge their own negotiations to persuade Iran to give up sensitive nuclear work will only succeed if Washington gets involved.

In recent years, the United States and Iran have quietly held occasional, low-level talks, under international auspices, about Iraq and Afghanistan.

Powell said he was not predicting formal US-Iranian talks, but echoed his earlier phrase. "In due course, it might turn out to be the case," he said.

"But conditions have to be present before you can simply walk away from not only the 25-year history, but current behavior," the top US diplomat said, alleging Iran supports Islamic militant groups and has a secret nuclear arms program.

Powell, whom Iran dismissed as a lame duck with no policymaking clout, sat alongside Foreign Minister Kamal Kharrazi on Monday night. According to both sides, they made small talk in English without touching on substantive diplomatic issues such as the nuclear crisis.

The two men had previously shared little more than a handshake in 2001. But neither objected to the symbolic seating arranged by Egypt, the host of the conference on Iraq.

And both countries recognize a lasting solution to some of their most intractable problems can only be achieved by puncturing their wall of mutual mistrust.

But tentative exchanges and dialogues have been initiated on several occasions in recent years only to collapse amid recriminations and accusations.

And Washington and Tehran strived to downplay Monday's "dinner diplomacy."

Powell said of the encounter: "There's no reason to be discourteous, even though sometimes you disagree about positions."

(Chinadaily.com.cn via agencies, November 24, 2004)