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Iranians burn U.S. and Israeli flags outside the former U.S. Embassy in Tehran on November 4, 2014, during a demonstration to mark the anniversary of its storming by student protesters that triggered a hostage crisis. ATTA KENARE/AFP/Getty Images

TEHRAN, Iran - Thousands of Iranians chanted "Down with America" at a major anti-U.S. rally on Tuesday marking the anniversary of the 1979 takeover of the U.S. Embassy in Tehran, just days ahead of a key meeting between the two nations' top diplomats over Iran's controversial nuclear program.

The gathering outside the former embassy compound in Tehran, which has become the annual venue for rallies commemorating the embassy attack and other American-bashing protests, was smaller compared to last year's event, which drew tens of thousands - a sign of improved Iran-U.S. relations since moderate Iranian President Hassan Rouhani took office last year.

But the rally, organized annually by hard-liners, still puts pressure on Rouhani, whose policy of outreach to Washington has faced harsh criticism from opponents at home.

Many in the crowd chanted "Death to Israel" and "Death to Britain," neither of which has an embassy here. Several protesters burned the American, Israeli and the British flag.

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Following the Islamic Revolution in Iran 35 years ago, militant Iranian students stormed the U.S. Embassy in 1979, claiming it was a center of plots against the Persian nation, and held 52 Americans hostage for 444 days. Ties between the two countries were severed after the siege and formal relations have not been restored since.

The anti-U.S. gathering this year also had a religious character as most Shiites world over on Tuesday observed the Ashoura, a remembrance of the 7th-century death of Imam Hussein, a grandson of the Prophet Muhammad revered by Shiites.

One of the rally speakers, cleric and university professor Ali Reza Panahian compared the U.S. to enemies Hussein faced in his final battle in Karbala in present-day Iraq.

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Iran celebrates 35th anniversary of U.S. Embassy hostage crisis

Irans reluctance to address allegations that it pursued nuclear weapons in the past wont impede officials seeking a far-reaching accord regulating its atomic future, said diplomats briefed on the matter.

A resolution to the possible military aspect of Irans nuclear work is one of the key gaps that must be bridged for a deal. United Nations Security Council resolutions demand that Iran clarify whether any of its activities were intended to build a bomb before sanctions can be lifted.

World powers and Iran are focusing their negotiations on defined limits to the Persian Gulf countrys uranium- enrichment work along with a timeline for the retraction of sanctions. Todays New York Times reported that U.S. officials welcomed a Russian proposal to accept Irans enriched uranium and convert it into fuel rods for the production of fuel.

Irans Foreign Ministry denied that a uranium deal had been reached with Russia, Fars news agency reported, citing spokeswoman Marzieh Afkham. No one was available for comment at Russias Foreign Ministry in Moscow today, a national holiday.

The New York Times report echoes analysts who have said a final deal may see Iran selling enrichment services to Russias largest nuclear company in return for precision-made fuel for nuclear reactors.

International Atomic Energy Agency Director General Yukiya Amano told diplomats last month that Irans goal to reach an accord before addressing questions about its past is reasonable, according to two people who attended the meetings, and a third with knowledge of the briefing.

The diplomats asked not to be named because of the sensitivity of the talks which resume later this month in the Austrian capital. The agencys press department declined to comment in an e-mail.

Now is not the best time to make rapid progress, Amano said at the Brookings Institution in Washington Oct. 31. But it doesnt mean there will not be progress in the future.

The IAEAs quarterly report about Iran is scheduled to be circulated among member states this week in Vienna. Inspectors are expected to say that Iran has hewed closely to an interim agreement that capped some nuclear activities in exchange for limited sanctions relief, according to the diplomats.

Amano said his August visit with Iranian President Hassan Rouhani showed that political will exists in Iran to resolve the nuclear dispute. Rouhani began the current negotiating round after a September 2013 phone call with Barack Obama.

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Iran Nuclear Past Said Not Impediment to Ending Standoff

There are tentative signs that things could be changing between Washington and Tehran: The word on everyone's lips seems to be "detente." The hope among advocates of rapprochement is thatshared concernover the extreme Sunni Islamism of the Islamic State, not to mention America's fraying ties with Israel, could actually lead to a degree of cooperation between the United States and Iran.

It's possible, but a glimpse of the scene in Tehran on Tuesday shows why detente may not be so simple.

That's because today is the 35th anniversary of the start of the Iran hostage crisis, during which 52 Americans were held for 444 days in the turbulent aftermath of the Iranian Revolution. And like previous years, the date has become a time to celebrate anti-American sentiment in Tehran.

Thousands of Iranians attended a major anti-U.S. rally on Tuesday marking the anniversary of the 1979 takeover of the U.S. Embassy in Tehran. (AP)

Since 1979, the U.S. Embassy in Tehran has largely been empty, and diplomatic relations between the two -- formally broken in 1980 -- remain severed. (The United States instead relies on an interests section in the Swiss Embassy in Tehran.) In 2011, Time reported thattheIranian Revolutionary Guard Corps was thought to have been using the building, which was once likened to a high school by former U.S. diplomats.

The building's outside wall is now better known for a number of anti-U.S. murals that have been painted on the side.

The Associated Press reported that this year'sprotests appeared to have broughtaround 10,000 people into the streets, though the Los Angeles Times gave a smaller estimate, suggesting just 3,000. A report from Iran's semiofficial Fars News Agency suggested that "tens of thousands" of people had protested around the country.

There were other remarkable scenes. Arthur MacMillan,an Agence France-Presse correspondent in Tehran, pointed to one particularly striking piece of protest art:

Other images were more standard: Flags from the United States and Israel were burned, and banners mocking President Obama were raised.

It may seem a disheartening scene for detente, butsome journalists noted that the crowds seemed to be thinner than before. This may well be a sign of a weakening anger against Washington, but it may also be driven by domestic factors -- last year's large hard-liner turnout was at least partly a response to the election ofPresident Hassan Rouhani, a relative moderate, for example.

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