* China's Xi says "dialogue momentum" must be maintained
* Iran's Rouhani urges China to moderate West's demands
* Diplomats resume nuclear talks in Geneva on Wednesday (Adds Rouhani comments)
BEIJING/DUBAI, Nov 20 (Reuters) - China's president told his Iranian counterpart to "seize the opportunity" to improve relations with world powers, as diplomats head to Geneva hoping to clinch a preliminary deal to ease a nuclear dispute between Tehran and the West.
Wednesday's negotiations will be the third round between Iran and the six powers in just a month. Two weeks ago, they came close to sealing an initial accord to curb Iran's nuclear activity in exchange for limited relief from sanctions.
China, Iran's top oil customer and a permanent member of the U.N. Security Council, has opposed unilateral sanctions on Tehran such as those imposed by Washington and the European Union, and has called repeatedly for talks to resolve the decade-long dispute.
Policymakers on all sides have said an interim accord could be within reach during talks this week.
President Xi Jinping praised Iranian President Hassan Rouhani for his government's "proactive conduct" on nuclear talks and its efforts to improve ties with the international community, the official Xinhua news agency said late on Tuesday.
"China hopes Iran seizes the opportunity, maintains the dialogue momentum and seeks the greatest common factor to strive for the best results," Xinhua cited Xi as saying in a phone call with Rouhani.
China will continue to exert a proactive influence in the talks to create conditions for a long-term resolution, Xi said.
The goal is an interim deal that would allow time to negotiate a comprehensive, permanent agreement that provides assurances to the so-called P5+1 powers - the United States, Britain, China, France, Germany and Russia - that Iran's nuclear programme will not eventually produce bombs.
Iran denies it wants to develop a nuclear weapons capability and insists its programme is limited to the peaceful generation of electricity and medical research - a stance Rouhani reiterated during the call with Xi.
"The last talks made considerable progress and if problems had not been created, we could have reached a win-win agreement," Rouhani was quoted as saying by the Iranian state news agency IRNA.
The last round of talks stumbled over Iran's insistence that its "right" to enrich uranium be recognised and disagreement over its work on a heavy-water reactor near Arak, which could yield plutonium for nuclear bombs once it becomes operational.
Iranian Foreign Minister Mohammad Javad Zarif has since indicated a way around the first sticking point, saying Tehran has the right to refine uranium, but will not insist that others explicitly recognise that right.
Rouhani blamed internal differences between Western members of the P5+1 for the failure to strike a deal at the talks earlier this month, and said China should use its political weight to rein in those asking Iran for too many concessions.
"We expect China, as a big country with authority in the field of international relations, to exercise its duty with respect to the excessive demands of some countries," he said.
Western governments suspect Iran has enriched uranium with the covert aim of developing the means to fuel nuclear weapons, a charge Tehran denies. Refined uranium can also fuel nuclear power plants - Iran's stated goal.
A shift towards meaningful diplomacy between Iran and the world powers began after the June election of Rouhani on a platform to relieve the country's international isolation and to get sanctions strangling its oil-dependent economy lifted. (Reporting by Michael Martina in Beijing and Isabel Coles in Dubai; Editing by Michael Perry and Gareth Jones)