"It is clear that we both want to make progress, and that there is some common ground," Ashton, who is formally leading the talks, told reporters at the end of the talks. "However, significant differences remain. Nonetheless, we do agree on the need for further discussion to expand that common ground."

Israeli leaders have been critical of the talks, claiming it allows Iran to buy time and drive a wedge between Washington and Jerusalem. On Wednesday, Israel's Defense Minister Ehud Barak said even possible moves by Iran to open its nuclear facilities to greater U.N. inspection doesn't rule out a possible Israeli military strike.

Iran went into the Baghdad talks seeking guarantees the West will scale back on its sanctions, which have targeted Iran's critical oil exports and have effectively blackballed the country from international banking networks.

Instead, Tehran's negotiators on Thursday rejected proposals by the world powers to curb its nuclear program without getting much in return, calling them unbalanced.