Both US Secretary of State Hillary Clinton and her Russian counterpart Sergei Lavrov said the meeting marked the beginning of a thaw in relations between the two superpowers.

"This is a fresh start, not only to improve our bilateral relationship but to lead the world in important areas, particularly with respect to nuclear weapons and nuclear security," said Clinton after the meeting in Geneva.

Russia's Foreign Minister said that both parties could find shared ground.

"I think we can arrive at a common view, both in the context of strategic offensive weapon and missile defence," Lavrov told a joint news conference.

Clinton also said that Washington and Moscow have agreed to a work plan towards renewing their START disarmament treaty, which is due to expire by December 5.

"We intend to have an agreement by the end of the year, this is of the highest priority to our governments," she said.

The treaty, which was signed in 1991, committed both parties to cut their stock of arsenal, including reducing missiles to a maximum of 1,600 and warheads to no more than 6,000.

A senior US official later said that they would be discussing reductions in their nuclear arsenal, but he said it was too early to specify the levels.

The meeting in Geneva marked a move between the two countries to "reset" their relationship, after growing tensions crystallised around Russia's August show of force in its brief war against US-ally Georgia.

It was also intended to lay the ground work ahead of a meeting between Obama and Russian President Dimitry Medvedev at the April G20 summit in London.

Clinton and Lavrov signalled that the meeting in Geneva was "very productive" and that priorities had coincided.

The US Secretary of State also said they discussed "Iran" at length and that the United States was ready to welcome Russian ideas and advice.

But she signalled that Washington wanted to continue economic sanctions against Tehran even though it has not finalised its policy on Iran.

She emphasised that the Obama administration was still reviewing the "potential steps" needed to "try to dissuade or prevent Tehran from acquiring nuclear weapons" and end Iranian "support of terrorism."

"We are not yet ready to discuss options that we are going to adopt," Clinton said.

Lavrov welcomed the opportunity to discuss Iran further.

"We very much appreciate that the Obama administration, in the course of its review, is prepared to listen to other opinions, including Russia's," he told journalists.

However, both parties also acknowledged that sticking points remained.

"We did not agree on everything but we agreed to work on every issue, including those we differed on," said Lavrov, citing the independence of Kosovo as one of the issues where "we have quite serious differences with the US, and we do not see eye to eye."

Clinton, meanwhile, pointed to Georgia as an area of discord, but said the two ministers had focused on how violence could be reduced and how progress could be made by Russia and Georgia in the Geneva peace talks.

Clinton noted that the US and Russia needed "more trust, predictability and progress -- that only comes from working together."

The meeting started with a light touch when Clinton handed Lavrov a block with a red button wrapped marked "reset" in English, a reference to a speech by new US Vice-President Joe Biden signalling that the Obama administration wanted vastly improved ties with Russia.

But the button also bore a Russian word that was meant to translate as "reset."

"We worked hard to get the right Russian word. Do you think we got it?," Clinton asked Lavrov. "You got it wrong," he responded as they laughed and posed for photographers.

Instead of using the Russian word for "reset" -- perezagruzka -- the word used was "peregruzka," which translates loosely as "overload" or "overcharge," according to Russian speakers.

earlier related report
Despite upbeat mood, tough US-Russia talks ahead: experts
Despite a warming in ties since Barack Obama's inauguration, the United States and Russia face difficult talks on a landmark Cold War-era nuclear arms treaty that expires in December, experts say.

Washington and Moscow will place the "highest priority" on reaching a deal on the Strategic Arms Reduction Treaty (START), US Secretary of State Hillary Clinton said Friday after a friendly meeting with Russia's foreign minister.

Talks on START made little progress during the presidency of George W. Bush, raising worries about the demise of the 1991 treaty, which limits the strategic atomic arsenals of both sides to 1,600 missiles and 6,000 warheads.

Obama's arrival has given fresh momentum towards an agreement but the two sides have much work and little time.

START expires on December 5 and the Obama administration is still assembling its Russia team while juggling other pressing issues such as Iran, the wars in Iraq and Afghanistan and the economic crisis.

The treaty, a lengthy document that details complex verification procedures, contains a provision that would allow it simply to be extended for five years by mutual consent.

Russia has resisted that option, though, insisting in recent years it wants to negotiate a new, updated and legally-binding treaty with a broader scope.

"The talks will be very, very difficult," said Sergei Koshelev, the deputy head of the Russian foreign ministry's security and disarmament department.

But Koshelev, who was speaking at a round-table discussion in Moscow last week with both US and Russian arms control experts, indicated that reaching agreement would be easier if relations continued to warm.

"To have a new document on December 5 ... above all it is necessary to have a clear change in the climate of Russian-US relations," Koshelev said.

Just half a year ago, those relations were mired in their worst crisis since the Cold War after Russia fought a brief war with US-allied Georgia.

Bush had already enraged Moscow with his plan to deploy a US missile shield in eastern Europe, which Russia sees as a threat to its security despite US assurances that it is directed against "rogue states" like Iran.

The missile shield spat was among the factors stalling progress in the START negotiations.

Russia says the talks must be broadened to include missile defence. But that was rejected by Bush administration, which in 2002 unilaterally pulled out the 1972 Anti-Ballistic Missile (ABM) treaty in order to proceed with its shield.

"The Russian side will insist that these questions of the interdependence of missile defence... and the questions of strategic arms reduction must be addressed in the new document," Koshelev said.

Both sides should make concessions on missile defence to move forward, said Edward Ifft, a former US diplomat and negotiator in the original START talks who is now a professor at Georgetown University in Washington.

"The US needs to take more seriously Russian concerns regarding future ABM systems, especially those close to Russian territory," Ifft said at the discussion.

"For its part ... Russia needs to recognise more fully US concerns regarding terrorism and rogue states, and this includes understanding US views on missile defences," he added.

Other wide gaps between the US and Russian positions are also likely to keep negotiators busy as they thrash out the terms of a new accord this year.

For instance Russia insists that a new treaty must limit not just the number of warheads but also the means of delivering them -- missiles, bombers and submarines.

The US meanwhile would prefer to keep the focus on warheads, in particular on "operationally deployed" warheads which are actually kept in missiles and bombers.

But Russia worries this would give the US too much "upload potential" -- in other words, that Washington could keep numerous warheads in storage and quickly alter the balance of power by "uploading" them onto missiles.

Even with those differences things can only improve from the Bush years, argued Roland Timerbaev, a retired Russian diplomat and veteran of US-Soviet arms control talks.

"The last few years were the worst in terms of arms control for the entire postwar period," Timerbaev said. "It cannot get worse. It can only get better."

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