Iran slows nuclear pace but bomb suspicions grow

By Mark Heinrich

VIENNA (Reuters) - Iran has slowed its expansion of uranium enrichment and met some demands for transparency but allegations it researched how to build atom bombs look credible and Tehran must address them, the U.N atomic watchdog said.

The International Atomic Energy Agency report will form the basis for six-power talks on September 2 to look into harsher U.N. sanctions against the Islamic Republic over a uranium enrichment campaign the West fears is a stealthy quest for nuclear weapons.

Russia and China, close trade partners of Tehran, may resist expected calls from Western powers to squeeze Iran's lifeblood oil sector by pointing to new Iranian gestures of cooperation with IAEA inspectors, cited in the agency report.

But diplomats said a summary of an IAEA probe into alleged military dimensions to Iran's nuclear activity was unusually blunt, giving credence to intelligence material, and would stiffen Western resolve to seek tougher sanctions.

"This latest IAEA report catalogues a litany of Iranian obfuscation and obstruction. It makes clear that Iran continues wilfully to fail to meet its legally binding international obligations," Philip Parham, Britain's deputy ambassador to the United Nations in New York, told Reuters.

The IAEA said Iran was enriching uranium with about 300 fewer centrifuges than the almost 5,000 operating at the time of the last IAEA report, the first such scaleback in around three years. The report did not venture possible reasons.

But an informed senior diplomat told Reuters earlier a batch of machines had been taken down for maintenance or repairs.

However, the confidential U.N. watchdog report, obtained by Reuters, said Iran had raised the total number of installed, though not all enriching, machines by some 1,000 to 8,308.