Workers install an Oscars sign to hang over the arrivals section along Hollywood Boulevard, in preparation for the 85th Academy Awards in Hollywood, California, on Sunday.

Los Angeles - Hollywood's finest gathered on Sunday for the Oscars, with Ben Affleck's Iran hostage drama Argo bidding to edge out Steven Spielberg's Lincoln in one of the least predictable races in years.

The Californian sun sparkled on golden Oscar statuettes lining the red carpet outside the Dolby Theatre, ahead of the A-list fashion parade that precedes the 85th Academy Awards, the climax of Hollywood's awards season.

In a heavily musical show, British songstress Adele was to sing 007 theme Skyfall - as part of a segment feting 50 years of Bond films - and legendary diva Barbra Streisand give her first Oscars performance for 36 years.

Affleck - who would be the first person to win best picture without being nominated as director since Driving Miss Daisy in 1990 - got a diplomatic boost on Saturday when new US Secretary of State John Kerry tweeted best wishes.

“Good luck (at)BenAffleck and #Argo at the Oscars. Nice seeing (at)StateDept & our Foreign Service on the big screen. - JK,” wrote Kerry, referring to the film's plot about an audacious CIA plot which rescued six US diplomats from Tehran.

Spielberg, bidding for his first best picture Oscar since Schindler's List in 1994, tops the nominations with 12 nods for Lincoln - but Argo has cleaned up in Hollywood's awards season so far, despite having only seven.

Although he started the season two months ago as the favourite, Spielberg may have to settle on Sunday for the best director award - one that Affleck cannot beat him to, having not been nominated in the category, in a perceived snub.

But again here there could be an upset, with rivals including Taiwan-born Ang Lee for Life of Pi, David O. Russell for Silver Linings Playbook, or even Austrian dark horse director Michael Haneke for Cannes-topping Amour.

One near-certainty on Sunday is that Lincoln star Daniel Day-Lewis will be named best actor, a record third for the British-Irish actor after wins in 1990 for My Left Foot and in 2008 for There Will Be Blood.

For best actress, the early favourite was Jessica Chastain, playing a CIA agent hunting Osama bin Laden in Zero Dark Thirty, but the clever money is now on Jennifer Lawrence for her turn in Silver Linings Playbook.

The best supporting actress race is more open, although Anne Hathaway is probably still the frontrunner for her heart-wrenching turn in Les Miserables, which is also nominated for best picture.

The most unpredictable race of all is perhaps for supporting actor, with Hollywood legend Robert De Niro tipped by some for playing Cooper's father in Silver Linings Playbook.

But strong rivals in the category include Austrian Christoph Waltz as a white bounty hunter who frees Jamie Foxx's black slave in Quentin Tarantino's blood-spattered Django Unchained, as well as Tommy Lee Jones in Lincoln.

On the foreign front, the clear frontrunner is Amour, which won the Palme d'Or at last year's Cannes Film Festival for its heart-wrenching portrayal of an elderly couple coping with encroaching physical and mental illness.

Its French female lead, Emmanuelle Riva, could even cause an upset in the best actress category, some critics believe. Riva, who turned 86 on Sunday, is coincidentally also the oldest ever best actress nominee.

The best animated feature contest is widely seen as a battle between Scottish-themed princess adventure Brave and Wreck-It Ralph, about a video game villain fed up with being the bad guy.

On the eve of the Oscars, Silver Linings Playbook got a publicity boost on Saturday when it was named best film at the Independent Spirit Awards, as well as winning the best actress and best director prizes.

In a more dubious honour, the anti-Oscar Golden Raspberries, or Razzies, gave seven of their 10 prizes to the last installment of the Twilight franchise, including worst film, worst director and worst actress for Kristen Stewart.

Sunday's show was to be hosted by Family Guy creator Seth MacFarlane, an edgier choice seen as part of a strategy to appeal to younger audiences. He will be joined on stage by his potty-mouthed teddy bear creation Ted.

The US TV audience for the Oscars has dropped from 46-million in the 1990s to below 40-million in the last five years, while viewers' median age has risen from less than 40 to nearly 53, according to polling group Nielsen.

“Ready, Seth, Go,” said a huge poster above the closed-off section of Hollywood Boulevard, transformed into a vast red carpet for the parade ahead of Sunday evening's show. - Sapa-AFP