* Iran, world powers enter second day of talks in Almaty
* Tehran swerved sanctions offer, made its own proposal
* Diplomats says diplomacy likely to continue
By Justyna Pawlak and Yeganeh Torbati
ALMATY, April 6 (Reuters) - Iran enters a second day of talks with world powers on Saturday no closer to resolving a nuclear dispute that has led to sanctions on its oil exports and talk of a new Middle East war.
The final day of negotiations is unlikely to achieve more than a willingness to keep talking, after Iran responded on Friday to a limited offer to ease sanctions with a proposal of its own that puzzled Western diplomats and which Russia said raised more questions than answers.
With all sides aware that a breakdown in diplomacy could move the decade-old standoff a step closer to war, no one in the Kazakh city of Almaty was talking about abandoning diplomatic efforts. But an actual deal was as far away as ever.
"We had a substantive exchange. But there is still a wide gulf between the parties. We are considering how we move on from here," said one Western diplomat after five hours of talks.
With a June 14 presidential election looming in Iran, hopes for a breakthrough were slim even before Friday's talks when Iran declined to accept or reject an offer to ease some sanctions in exchange for curbing some of its nuclear work.
Iran's deputy negotiator Ali Bagheri said Iran had given a "detailed response to all the questions".
Russian Deputy Foreign Minister Sergei Ryabkov said: "Iran has given an answer to the proposals of the six powers. It is the kind of answer that creates more questions ... But this shows that the negotiations are serious."
Iran's critics, which accuse it of seeking nuclear weapons capability, have accused Tehran in the past of using diplomacy as a stalling tactic and the latest inconclusive talks are unlikely to reassure Israel which says it could launch air strikes to stop Iran getting the bomb if necessary.
Talks are expected to resume after 10 a.m. (0400 GMT).
Without substantial progress in coming months, Western governments are likely to impose new economic sanctions on Iran.
"It seems that instead of narrowing, the gap between the sides actually widened," said Ali Vaez, an Iran expert with the International Crisis Group.
"Whatever happens, one thing is clear: each time that there is an attempted and failed round of discussions, the price of giving away assets that are acquired at great cost rises. Resolving this problem becomes more and more complicated."
In their second meeting with Iranian negotiators in Almaty this year, the six nations - the United States, Russia, China, France, Britain and Germany - tried on Friday to persuade Iran to abandon its most sensitive atomic work, as a first step to a broader agreement.
But deputy negotiator Ali Bagheri indicated that Iran wanted to know how and when its main concerns would be addressed before it agreed to any intermediate steps.
Iran, which denies seeking nuclear weapons, wants major economic sanctions - including on its oil exports and banks - lifted and its right to enrich uranium publicly recognised.
The six nations, however, say this right only applies when nuclear work is carried out under sufficient oversight by U.N. inspectors, something Iran has refused to grant. Since 2006, the U.N. Security Council has demanded that Iran stop the process.
The powers said in February that they wanted Iran to convince them it was serious about a final deal by stopping enrichment of uranium to 20 percent, an important technological advance en route to producing weapons-grade material, ship out some stockpiles and shutter a facility where such work is done.
In return they offered relief on sanctions on Iranian petrochemicals and trade in gold and other precious metals. (Editing by Robin Pomeroy)