* Iran and powers meet during East-West crisis over Ukraine
* Little sign of spillover so far -Western diplomats
* Talks expected to focus on uranium enrichment, Arak plant
* Aim is to reach long-term nuclear deal by late July
* U.S. senators tell Obama Iran must scrap Arak, Fordow plants (Adds comments by Iranian official in paragraphs 6-8 and 23)
By Justyna Pawlak and Louis Charbonneau
VIENNA, March 18 (Reuters) - Iran and six world powers sought on Tuesday to make headway toward resolving their decade-old nuclear dispute, with Western officials expressing hope the talks would not be further complicated by the Ukraine crisis.
So far, diplomats said, there is little sign that the worst East-West confrontation since the Cold War would undermine the quest for a deal over Iran's atomic activity and avert the threat of a Middle East war.
The March 18-19 meeting between Iran and the powers - the United States, Russia, China, France, Britain and Germany - began a day after Washington and the European Union imposed sanctions on A number of Russian officials over Moscow's takeover of Ukraine's Crimea region.
"I haven't seen any negative effect," Michael Mann, a spokesman for EU foreign policy chief Catherine Ashton who coordinates the talks on behalf of the six nations, told reporters. "We continue our work in a unified fashion."
But that unity among the powers on Iran may still be tested in the gathering of their chief negotiators on the issue in the Austrian capital Vienna, with the four Western states and Russia at loggerheads over the future of Ukraine.
Iran's top nuclear negotiator Abbas Araqchi said that the crisis in Ukraine had so far "no impact" on the talks with major powers.
"We also prefer the P5+1 to have a unified approach for the sake of negotiations," he told reporters, adding that the talks were "positive and very good".
Araqchi also said that the next round of talks were expected to be held in Vienna on April 7-9.
Russia and the West have in the past differed on how best to deal with Iran, with Moscow generally enjoying warmer ties with the Islamic Republic and suggesting Western fears about any nuclear weapons designs by Tehran are overblown.
As in previous meetings, Deputy Foreign Minister Sergei Ryabkov represented Russia at the talks, which were expected to end late on Wednesday.
Despite a concerted push to end the decade-old nuclear dispute after a relative moderate, Hassan Rouhani, was elected president last year on a platform to end Iran's international isolation, big power divisions have re-emerged.
Sources familiar with the matter told Reuters earlier this year that Moscow and Tehran were negotiating a $1.5 billion per month oil-for-goods swap that would enable Iran to lift oil export substantially in defiance of U.S. sanctions.
Between 2006 and 2010, Russia and China only reluctantly supported four rounds of U.N. sanctions against Iran over its nuclear activity, and condemned subsequent U.S. and European sanctions targeting the OPEC producer's lifeline oil exports.
Tensions may have surfaced elsewhere in Vienna, with Iranian media saying Foreign Minister Mohammad Javad Zarif had cancelled a customary pre-talks dinner with Ashton on Monday evening.
The official IRNA news agency attributed the cancellation to Ashton's "undiplomatic" behaviour, an apparent reference to her meeting Iranian human rights activists during her first visit to Tehran 10 days ago.
U.S. SENATORS OUTLINE 'CORE PRINCIPLES' FOR IRAN DEAL
Iran has long denied accusations from Western powers and Israel that it has sought to develop the capability to produce atomic weapons under the cover of its declared civilian nuclear energy programme.
In November, Iran and the six powers struck an interim deal under which Tehran has since shelved higher-grade uranium enrichment - a potential path to atomic bombs - and obtained modest relief from punitive sanctions in return.
That pact was designed to buy time for hammering out a final settlement by a July deadline, under which the West wants Iran to significantly scale back its nuclear programme to deny it the capability to devise a nuclear weapon any time soon.
Zarif, who leads Tehran's delegation, said he expected a trickier round of talks this week than the previous meeting in February as the two sides try to overcome stumbling blocks such as Iran's Arak heavy water reactor and levels of uranium enrichment.
"Today enrichment was the main subject and tomorrow Arak will be discussed," a member of the Iranian delegation said.
A Western diplomat said no deals on any individual issues were expected to be reached at the Vienna round, saying that "nothing is agreed until everything is agreed".
Another added that any discussions on Arak, which the West fears could provide Iran with an alternative route to obtaining bomb material, or the extent of uranium enrichment, took place against the backdrop of Iranian demands over sanctions relief.
Araqchi, echoing Iran's official stance, said that Iran's Arak reactor will continue its activities.
Supreme Leader Ayatollah Ali Khamenei has granted the Iranian nuclear team "carte blanche" to provide guarantees to the West that the country's nuclear programme is peaceful, said a senior Iranian official who asked not to be named.
"But the red line is closure of any nuclear site and stopping enrichment," the official said. "The talks are becoming more and more difficult because hardliners in Iran are watching any outcome very closely."
He was alluding to powerful conservatives in the Islamic Republic's security and clerical establishments deeply suspicious of Rouhani's diplomatic opening to the West.
In an opinion piece published in the Financial Times, Zarif said Iran was serious about striking a deal but urged the six powers to step up their efforts towards an agreement - in an apparent swipe at hawks in Washington.
"Our counterparts will have to make tough choices. They will have to back up rhetoric with action," he wrote. "Some of them will have to spend copious amounts of political capital to remain credible before the international community. Others, who have grown comfortable with the status quo, will have to scramble to reposition themselves."
In Washington, a bipartisan group of 83 U.S. senators - a vast majority of the U.S. legislature's 100-member upper house - wrote to President Barack Obama on Tuesday, outlining necessary "core principles" for a final agreement with Tehran.
The letter says Iran should abandon the Arak reactor and its Fordow enrichment plant, though it does not mention the much larger underground uranium enrichment facility at Natanz.
The senators also say Iran should not be allowed to circumvent sanctions during the negotiations and urges the administration to deal with sanctions violators harshly.
"We must signal unequivocally to Iran that rejecting negotiations and continuing its nuclear weapon programme will lead to much more dramatic sanctions, including further limitations on Iran's exports of crude oil and petroleum products," the senators told Obama. (Additional reporting by Parisa Hafezi and Fredrik Dahl in Vienna; Editing by Mark Heinrich and Mohammad Zargham)
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