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By Mark Heinrich VIENNA (Reuters) - World powers will seek to finalise an agreement with Iran on Monday on processing its uranium abroad to help allay Western fears it is developing nuclear weapons. But Iran has dampened Western expectations it is ready to seal the deal. "Time is on our side," a senior Iranian official said. Tehran would send junior officials rather than its nuclear energy chief to the meeting in Vienna, he told Reuters. Iran won itself a reprieve from the threat of harsher U.N. sanctions by engaging six powers in rare high-level talks on October 1 in Geneva that opened the door to detente over its disputed nuclear programme after a seven-year standoff. Iran stuck to its refusal to curb uranium enrichment. But it made two gestures of transparency that the powers touted as a basis for further steps they say Iran should make to disprove suspicions of a clandestine agenda to develop nuclear weapons. Iran granted U.N. inspections at a hitherto hidden uranium enrichment site, and agreed in principle to have Iranian uranium processed in Russia and France for use by a Tehran reactor that makes cancer-care isotopes but is running out of imported fuel. Two days later, the International Atomic Energy Agency pinned down October 25 to start surveillance of the site near Qom. The United States, Britain, France and Germany indicate they will pursue sanctions targeting Iran's vital oil sector if the diplomacy begun in Geneva does not get Iran to temper and open up its nuclear programme to scrutiny by the end of this year. Monday's technical talks in Vienna, to be shepherded by IAEA experts, will be the first chance for Iran and world powers to make good on prospects for nuclear cooperation raised in Geneva. But the uranium proposal faces pitfalls due to differences over exactly what was agreed on October 1 and what each side wants out of the deal. Western diplomats said Iran assented in principle to sending about 80 percent of its declared stockpile of low-enriched uranium (LEU) to Russia for further refinement, then on to France for fabrication into fuel assemblies. The material would then be returned for use by the Tehran reactor to replace fuel, obtained from Argentina in 1993 but set to run out in about a year, in a form resistant to being enriched to a very high -- or weapons-grade -- degree. For world powers, the deal's benefit lies in greatly cutting Iran's LEU stockpile. This has no apparent civilian use since Iran has no operating nuclear power plants, but is enough to fuel one atomic bomb, if Tehran chose to purify it further. Iran, which says it is enriching uranium only for future electricity, would save its medical isotope production despite sanctions that make it hard for it to import nuclear materials. "WIN-WIN DEAL?" IRAN HESITATES Russian, French, U.S. and IAEA officials want to wrap up key terms with Iran on Monday, including a timetable and anti-proliferation guarantees once Iran recovers the material. French officials said the deal should entail Iran shipping out all 1.2 tonnes of the LEU before the end of this year. "This is a win-win deal, a real opportunity for Iran to turn around perceptions of its nuclear behaviour, so they ought to take the commitment they made in Geneva seriously," said a senior Western diplomat close to the negotiations. But Tehran has signalled it will not be prepared to make final decisions on Monday. Officials disclosed on Thursday that Ali Akbar Salehi, the nuclear energy programme chief, would not take part in the talks; rather, only lower-level aides. Salehi had earlier said he would participate. Tehran has also denied tentatively agreeing to any details of the plan in Geneva. It said it was also looking into buying the needed fuel abroad, and warned it could enrich to higher levels itself if a deal could not be done with the powers. "We have conditions and suggestions that need to be discussed," a senior Iranian nuclear official said. He suggested strongly that these issues would take longer than Monday to resolve, without saying what Iran had in mind. Diplomats said Iran seemed to be again employing a savvy strategy of ambiguity to draw out dialogue, keeping deal-making channels open to give Russia and China enough political cover to continue blocking tougher U.N. sanctions against Tehran. More importantly, Iran would be buying time to achieve its industrial enrichment ambitions and overcome technical barriers. Shoring up Iran's position, China said on Wednesday only "practical cooperation and close coordination" with Iran could resolve nuclear issues peacefully. Russia deflected a U.S. attempt in talks to obtain commitments to broader sanctions if Iran did not live up to new expectations of cooperation. The uranium deal may not mean much in the longer run unless the Islamic Republic caps or halts enrichment -- to lock in the non-proliferation gains accrued from shipping LEU abroad. But Iran rules out any freeze or suspension of enrichment activity as an offence to national pride and sovereignty. It also rejects an IAEA protocol authorizing inspectors to roam beyond declared nuclear plants to verify that it is not hiding more sites of possible use in "weaponising" enrichment. The major powers will press Iran on both issues at the next round of high-level diplomatic negotiations due in late October. (Additional reporting by Parisa Hafezi in Tehran and Estelle Shirbon in Paris; Editing by Ralph Boulton)