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

Under an interim deal with six world powers, Tehran is to dilute half of its 20% enriched uranium to a lower grade suitable for use as reactor fuel. Yukiya Amano told the agency's 35-nation board that that process had "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%.

Uranium enriched to 20% is only a technical step away from the 90% 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.