America and Iran continued their uncertain dalliance today, with ambassadorial talks in Egypt undermined by military raids in Baghdad, a cryptic conversation between Condoleezza Rice and her Iranian counterpart and a violinist's red dress.

After the US Secretary of State "exchanged pleasantries" with the Iranian Foreign Minister, Manouchehr Mottaki, on the first day of a conference on the future of Iraq in Sharm-el-Sheikh yesterday, the stage appeared set for a minor thawing of relations between Washington and Tehran and the first top-level negotiations since 1980.

That impression was hardened by a meeting between Ms Rice and the Syrian Foreign Minister, and again today by talks between US and Iranian ambassadors on the sidelines of the conference, which has attracted 50 nations to the Red Sea in an effort to improve the economic, political and security chances of Iraq.

"I don’t know what happened during this meeting but I believe it was positive and indications are positive,” said Hoshyar Zebari, the Iraqi Foreign Minister, who has been among those trying to encourage a rapprochement between the two major external players in his country.

“This is a process I think. It needs more work. There is a lot of suspicion. There is a lot of mistrust. But it is in my country’s interest really to see a reduction of this tension," he added.

But other evidence from the conference, and the Iraqi capital, suggested that the last 24 hours in America and Iran's severely frayed relationship have been anything but straightforward. Iraqi officials present at Ms Rice's brief conversation with Mr Mottaki over lunch yesterday recounted the following strange diplomatic exchange:

“As-salama aleikum (peace be upon you),” Mr Mottaki is believed to have said.

“Hello,” replied Ms Rice. “Your English is better than my Arabic."

At which point the Egyptian Foreign Minister, Ahmed Aboul Gheit, is said to have joined in, encouraging the two countries to talk: “We want to warm the atmosphere some.”

To which Mr Mottaki replied: “In Russia, they eat ice cream in winter because it’s warmer than the weather," a somewhat obscure comment that Ms Rice is said to have agreed with.

The Egyptian Foreign Minister is then reported to have persisted with his match-making intentions, inviting Ms Rice and Mr Mottaki to an informal dinner on the beach in Sharm-el-Sheikh last night, where Mr Mottaki was placed directly opposite the US Secretary of State.

But the Iranian minister did not stay long enough even to sit down, with reports differing as to whether he objected to the seating arrangements or the revealing dress of the violinist who was entertaining the diplomats. “I am not sure which woman he was afraid of: the woman in the red dress or the Secretary of State,” said Sean McCormack, the US State Department spokesman.

Any progress towards easing relations between Iran and America — which are heavily strained by Iran's disputed nuclear programme and US accusations that Tehran is providing weapons and support to extremist Shia militias in Iraq — appeared to be then further undermined by a speech given by Mr Mottaki this morning.

The Iranian Foreign Minister used his address before the conference to say that the US military presence in Iraq was the source of the ongoing instability and violence there. “There should be no doubt that the continuation of and increase in terrorist acts in Iraq originates from the flawed approaches adopted by the foreign troops,” he said. “The United States must accept the responsibilities arising from the occupation of Iraq.”

Mr Mottaki also made strong objections to the American capture of five Iranian officials, described as military agents by the US and diplomats by Iran, in January this year.

The speech surprised the Iraqi delegation, led by Prime Minister Nouri al-Maliki, which is anxious to see an improvement in relations between Iran and the US. “We didn’t expect it to be in this manner," an aide told the Associated Press. Mr al-Maliki, for his part, asked countries across the region to help secure Iraq's borders and bring about a reconciliation between the country's warring sectarian factions.

Away from the conference, the day-to-day exchange of accusations between the US and Iran continued after a major raid on a Shia neighbourhood in Baghdad, which military officials said discovered a cell of insurgents using Iranian-made weapons to target American soldiers.

A US military statement said 16 suspected militants had been detained and were believed to have helped smuggle militants and so-called Explosively Formed Penetrators (EFP’s), roadside bombs capable of piercing armoured vehicles, across the border. The group was also suspected of carrying out kidnappings and "interactions with rogue elements throughout Iraq and into Iran".

Iranian-made EFP's were first used against British troops in southern Iraq, where the border with Iran is at its most porous, but US officials have seen their use spread across the country, with attacks against American troops reaching a peak of 65 during April, mostly in eastern Baghdad. Four EFP's were among a weapons cache found by Iraqi commandos south of Baghdad last month.

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