(Adds U.S. comment, paragraphs 1, 6-8) BAGHDAD, Oct 31 (Reuters) - Iran is willing to hold further talks with the United States on improving security in Iraq, Iran's Foreign Minister Manouchehr Mottaki said on Wednesday, but Washington reacted coolly to the idea. Mottaki also said Iran would present a plan on Iraq at a meeting of Iraq's neighbors in Istanbul this weekend but gave no details of what it would propose. Washington has said it is open to the possibility of fresh talks with its long-time foe, whom it accuses of fuelling Iraq's sectarian violence by arming and funding Shi'ite militias. Iran denies the charge. "About the readiness of the Americans for a new round of talks ... I respond that we do consider positively this initiative," Mottaki told a joint news briefing in Baghdad with his Iraqi counterpart Hoshiyar Zebari. It was not clear whether he was referring to ambassadorial level talks or the sub-committee set up by Iran, Iraq and the United States to improve cooperation on Iraqi security. The committee has met only once, in August. U.S. State Department spokesman Sean McCormack said there were no plans for further talks at the ambassadorial level or between U.S. Secretary of State Condoleezza Rice and any Iranian officials at the Istanbul conference this week. "It's still a channel that each side could avail itself of," McCormack told reporters in Washington. "But ... thus far it has yielded little to nothing -- if not a worsening of the situation." Asked what were the chances of Rice meeting Iranians in Istanbul, a U.S. official who asked not to be named because of the sensitivity of the matter said: "At this point, I don't see it. I mean, that could change between now and then but there is no plans for it right now." Zebari, the Iraqi foreign minister, took a more upbeate stance, telling reporters: "I had a positive response from (Mottaki) that the Islamic Republic is ready to continue the dialogue because this is a very useful and important channel for dialogue and helping the situation in Iraq." The United States last week imposed sanctions on more than 20 Iranian companies, major banks and individuals and designated Iran's Revolutionary Guard Corps a proliferator of weapons of mass destruction and its Qods force a supporter of terrorism. The U.S. military says the Qods Force is supplying rockets, mortars and sophisticated roadside bombs to Shi'ite militias in Iraq to kill American soldiers and weaken the Iraqi government. "Unfortunately U.S. officials and the government of the United States are lying to their people. The Islamic Republic of Iran is sorry for the killing of people of Iraq, even American soldiers," Mottaki said, speaking through an Arabic translator. Mottaki was in Baghdad for talks with Iraqi leaders ahead of the two-day Istanbul conference. "Our delegation participating in the conference will deliver a (plan) regarding the situation in Iraq," he said. U.S. ambassador to Iraq Ryan Crocker said last week that Iran's involvement in Iraq "continues to be a mixed, cloudy picture." He said he expected more talks with Iran, although no further meeting was scheduled. Crocker has met twice with his Iranian counterpart to raise Washington's accusations of Iranian meddling in Iraq. His first meeting, in May, was considered groundbreaking as the two countries have not had diplomatic ties for almost 30 years.
