VIENNA, Austria -- The head of the UN nuclear agency says Iran has cut its stock of uranium that is closest to atomic weapons-grade.

Under an interim deal with six world powers, Iran is to dilute half of its 20-per cent-enriched uranium to a lower grade suitable for use as reactor fuel. Yukiya Amano told the agency's 35-nation board Monday that that process "has reached the halfway mark."

The other half of the uranium is to be changed into a form that is relatively difficult to reconvert to 20 per cent.

Uranium enriched to 20 per cent is only a technical step away from the 90-per cent level needed for weapons.

Tehran denies wanting nuclear arms but has agreed to temporarily curb atomic work in exchange for sanctions relief as the sides work on a fuller deal.