The United Nations nuclear watchdog has discovered traces of processed uranium at a second site in Syria, the agency said on Friday, heightening concerns about possible undeclared atomic activity in the Arab state.

The International Atomic Energy Agency has been examining U.S. intelligence reports that Syria had almost built a North Korean-designed nuclear reactor meant to yield weapons-grade plutonium before Israel bombed it to rubble in 2007.

Inspectors who found uranium particles at the remote desert site a year ago also found similar traces at a small research reactor in the capital Damascus, which the IAEA knew about and checks once a year, an IAEA report said. These traces were different from Syria's declared nuclear material inventory.

The IAEA said in February that inspectors had found enough traces of uranium in soil samples taken from the bombed site a year ago to constitute a significant find.

Friday's report, obtained by Reuters, said "anthropogenic natural uranium particles" had also turned up in environmental swipe samples taken from hot cells of the Miniature Neutron Source Reactor (MNSR) facility in Damascus.

Syria, told of the IAEA's discovery last month, sent a written response to the IAEA on Monday. But this did not address the presence and origin of the particles and the UN watchdog was investigating a possible connection with the uranium particles found at the bombed site, the report said.

The IAEA has said in the past that satellite pictures taken before the Israel Air Force bombing revealed a building resembling a reactor.

But the new report said Syria, citing national security, was still ignoring IAEA requests for wider access and documentation to back up its assertion that Israel's target at Dair Alzour was a conventional military building.

The IAEA again urged Syria to provide additional data and trips to Dair Alzour and other allegedly related locations to allow test-sampling of destroyed or salvaged equipment and debris removed before investigators were let into the country.

"It is clearly in Syria's interest to render to the agency the necessary cooperation and transparency if it wishes the agency to be able to corroborate its assertion about the nature of the Dair Alzour site," the report said.

Syria's only declared nuclear site is the old research reactor and it has no known nuclear energy-generating capacity.

The report said Syria was also refusing to discuss satellite pictures the IAEA had offered to share with it.

Syria had provided information regarding procurement of certain equipment and materials including a large quantity of graphite and large quantities of barium sulphate," a compound sometimes used as a radiation shield in nuclear structures.

Syria had indicated the procurement efforts were civilian and non-nuclear, relating to water purification, the steel industry and shielding material for radiation therapy centers.

Syria has said the uranium particles retrieved from samples taken at Dair Alzour came from depleted uranium used in Israeli munitions, an assertion dismissed by the IAEA.

Syria has also suggested IAEA analyses were faulty and that satellite imagery Washington gave to the IAEA was fabricated.

Vienna diplomats said in March that Syria had told the IAEA it had built a missile facility on the desert tract hit by Israel, a disclosure apparently meant to reinforce the Syrian refusal to grant more IAEA access on national security grounds.

IAEA: Iran expands uranium enrichment to 5,000 centrifuges

A separate IAEA report said that Iran is continuing to expand its uranium enrichment, despite three sets of prohibitive UN Security Council sanctions.

International Atomic Energy Agency report said Iran had increased its rate of production of low-enriched uranium (LEU), boosting its stockpile by 500 kg to 1,339 kg in the past six months.

Iran's improved efficiency in turning out potential nuclear fuel is sure to fan Western fears of the Islamic Republic nearing the ability to make atomic bombs, if it chose to do so.

Oil giant Iran says it wants a uranium enrichment industry solely to provide an alternative source of electricity.

But it has stonewalled an IAEA investigation into suspected past research into bomb-making, calling U.S. intelligence about it forged, and continuing to limit the scope of IAEA inspections.

Commenting on the Iran report, the Washington-based Institute for Science and International Security, a think tank that tracks proliferation issues, said that at the present pace of production of enriched uranium, Tehran could make two nuclear weapons - should it choose to do so - within eight months.

David Albright, of the Institute for Science and International Security, said Iran now had accumulated enough LEU to convert into high-enriched uranium (HEU) sufficient for one atom bomb.

This would require reconfiguring Iran's centrifuge network and miniaturizing HEU to fit into a warhead -- technical hurdles that could take 1-2 years or more - and would not escape the notice of UN inspectors unless done at an undeclared location.

There are no indications of any such secret site.

"Still, Iran is ramping up enrichment to reach the point of potential nuclear weapons capability. They haven't made a political decision to do that. But their lack of constraint is disappointing given [U.S. President Barack] Obama's effort to start negotiations," Albright told Reuters from Washington.

The UN nuclear watchdog report said Iran had 4,920 centrifuges, cylinders that spin at supersonic speed, being fed with uranium hexafluoride gas (UF6) for enrichment nonstop as of May 31, a jump of about 25 percent since February.

Another 2,132 machines were installed and undergoing vacuum tests while a further 169 were being set up - bringing Iran's total number of deployed centrifuges at its underground Natanz enrichment hall to 7,231 -- with 55,000 eventually planned.

The IAEA had told Iran that given the burgeoning numbers of centrifuges and increased pace of enrichment, "improvements to the containment and surveillance measures are required in order for the agency to continue to fully meet its safeguards objectives", the report said, referring to basic inspections.

Senior inspectors were discussing solutions with Iran.

"There is now a forest of 7,000 machines, that's quite a lot, it's a very impressive place, and they will be installing more which could mean 9,000 (soon)," said a senior UN official who asked for anonymity to discuss sensitive information.

"That makes it increasingly difficult to do the surveillance [to ensure no diversions for bomb-making purposes elsewhere]. We are reviewing [the angles] of our cameras, walking rules [for workers handling equipment], where things are being kept."

At a separate pilot plant in Natanz, Iran continues to test small numbers of a more sophisticated centrifuge than the 1970s vintage it is now using. These models could refine uranium 2-3 times as fast as the P-1, analysts say.

IAEA chief Mohamed ElBaradei has urged Iran to engage with the United States, "grasp the hand that Obama is extending to you", and negotiate over its nuclear program to ensure it remains civilian under effective monitoring.

But little progress in coaxing Iran to open up to IAEA investigators and grant more wide-ranging inspections is likely without a major thaw in Tehran's relations with Western powers.

"The Iran file has been on the table for six years. It's high time to sort it out. We hope Iran and international community get to the table and start to come up with solutions so we can do our [non-proliferation] job," said the senior U.N. official.

Obama has set a rough timetable for negotiating results with Iran, saying he wanted serious progress by the end of the year. He has underlined that any U.S. overtures will be accompanied by harsher sanctions if there is no cooperation.