By Sue Pleming

SHANNON, Ireland, May 2 (Reuters) U S Secretary of State Condoleezza Rice said today she could address any question from Iran during meetings in Egypt and sought to tone down expectations about talks to stabilize Iraq.

Speaking en route to Egypt's Sharm el-Sheikh resort for meetings that include Iran, Baghdad's other neighbours and world powers, Rice ruled out ''full-scale negotiations'' with Iran's Foreign Minister Manouchehr Mottaki but said she would not avoid an exchange.

''If we encounter each other then I am certainly planning to be polite and see what that encounter brings,'' said Rice, who attended a meeting with Mottaki about Iraq last September at the United Nations but did not have any contact with him.

Rice said talks with Iran, which could be the most substantive high-level US meeting with Tehran in nearly three decades, would focus on Iraq but she would not cut off a conversation if it turned to Tehran's nuclear program.

''I think I can handle any question that is asked of me,'' she said. ''If we encounter each other and wander to other subjects I am prepared to address them at least in terms of American policy,'' added Rice before a refuelling stop in Ireland.

The United States is at odds with Iran over its nuclear program and will only negotiate with Iran if it suspends uranium enrichment which Washington say is aimed at building a bomb and Iran says is for power purposes.

''If the Iranians were to take a decision (to suspend) then we could have much broader talks,'' said Rice.

European Union foreign policy chief Javier Solana, who has urged Washington to deal directly with Iran, has been the chief negotiator with Tehran. ''It is better if the nuclear issue stays in that channel,'' said Rice.

SUSPICIONS The meetings in Egypt take place amid unrelenting sectarian violence in Iraq and mounting concern by Iraq's neighbours, particularly Saudi Arabia, that Shi'ite Prime Minister Nuri al-Maliki is not committed to reconciliation and that the violence will spill over.

''Iraq's neighbours have everything at stake here. Iraq is at the centre of either a stable West Asia or an unstable West Asia.

We should therefore all align our policies in ways that contribute to stability,'' said Rice.

Rice, whose government is under pressure to bring home U S troops in an increasingly unpopular war, said Maliki's government had made a greater effort recently to reconcile the majority Shi'ites and Sunni Arabs but she conceded it would be difficult to get neighbours to put aside their mistrust.

''Let's not have overreaching expectations (about the meeting). It will take some time to overcome suspicions in the region,'' she said.

She urged Iraq's neighbours, attending the meetings along with G8 nations and the European Union, to put more pressure on key players in Iraq.

''It is also an opportunity for the neighbours to be supportive of those efforts and to use their influence with important political factions in Iraq,'' she said.

Iraq's main Sunni bloc is considering quitting the Shi'ite-led government because it believes the concerns of Sunnis are not being addressed.

The neighbours conference on Friday is preceded by a meeting tomorrow attended by about 60 countries to endorse the International Compact for Iraq, a five year plan that grants international support in exchange for reforms by Iraq.

Deputy Treasury Secretary Robert Kimmitt told reporters travelling with Rice he hoped Arab countries and others would offer billions in debt relief to Iraq at the meeting and new aid pledges. He declined to provide figures.

REUTERS SZ HT1300