As Turkish President Abdullah Gul welcomed his guests at a seafront Ottoman palace, Ahmadinejad arrived sporting a broad smile, gave Gul a warm hug and waved to the cameras.

He was accompanied by his new foreign minister Ali Akbar Salehi, also Iran's nuclear chief, who made his first international appearance here Wednesday at a pre-summit gathering of the 10-member Economic Cooperation Organisation (ECO).

Salehi was appointed interim foreign minister last week after Ahmadinejad sacked Manouchehr Mottaki in a surprise move signalling an apparent falling out over nuclear policy.

The pair met with Turkish leaders to discuss a second round of talks that Iran would hold with the 5+1 group of world powers over its disputed nuclear programme, expected in late January in Istanbul.

Turkish Foreign Minister Ahmet Davutoglu said the discussions with the Iranians aimed to ensure that "the positive atmosphere that emerged (at the first round) in Geneva is sustained" in Istanbul.

He refused to claim any mediation role, stressing that Turkey would only host the gathering.

"But if the two sides agree to ask Turkey for any kind of support, we are always ready to give it," he told reporters. "The objective is clear: to free the world and the region from nuclear threats."

Turkey's Islamist-rooted government has established close ties with Tehran, insisting on a diplomatic solution to the nuclear row and reluctant to back a tougher line against the Islamic republic, its eastern neighbour.

In May, together with Brazil, it hammered out a nuclear fuel swap deal with Iran but the United States dismissed the accord.

The following month, Turkey refused to back fresh sanctions against Tehran, adopted at the UN Security Council, insisting that the swap deal should be given a chance.

Its "no" vote irked the United States and raised concern that NATO's sole Muslim-majority members is sliding away from the West, charges that Ankara vehemently denies.

Thursday's summit was attended by presidents Hamid Karzai of Afghanistan, Ilham Aliyev of Azerbaijan, Roza Otunbayeva of Kyrgyzstan, Asif Ali Zardari of Pakistan and Emomali Rahmon of Tajikistan, as well as Kazakh Prime Minister Karim Masimov.

Iraqi President Jalal Talabani participated as a guest.

The ECO, which promotes regional trade and economic development, also includes Turkmenistan and Uzbekistan, which sent lower-level officials.

In his opening speech, Gul lamented that the group was faltering in efforts to expand commercial links, stressing intra-regional trade had increased only from six to seven percent since 2005, undermining the 2015 target of 20 percent.

"We have to admit that this is a failure," he said, urging member states to speed up efforts to adopt an ECO accord calling for progressive removal of trade barriers.

"It should be understood that the way to economic stability and sustainable development for our countries goes through economic and commercial cooperation in the region," he said.

Energy security, transport and poverty reduction were expected to be other major topics in the talks.

The 10 member states cover an area of about eight billion square kilometres (three billion square miles), rich with natural resources, and represent some 400 million people.

On the sidelines of the summit, the foreign ministers of Turkey, Iran and Azerbaijan issued a joint statement pledging to enhance political consultations and hold regular trilateral meetings.

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