VIENNA, Aug 16 (Reuters) - Iran has made progress in its work on enriched uranium metal, the U.N. nuclear watchdog said in a report to member states on Monday seen by Reuters, despite Western warnings that such work threatens talks on reviving the Iran nuclear deal. "On 14 August 2021, the Agency verified ... that Iran had used 257 g of uranium enriched up to 20% U-235 in the form of UF4 (uranium tetrafluoride) to produce 200 g of uranium metal enriched up to 20% U-235," the International Atomic Energy Agency said, adding that this was step three in a four-step plan by Iran. The fourth includes producing a reactor fuel plate. read more Iran"s work on enriched uranium metal has angered Europe"s three top powers and the United States because that technology, and knowledge of how to produce it, can be used to make the core of a nuclear bomb. Iran insists its aims are entirely peaceful and it is developing a new type of reactor fuel. "Iran has no credible need to produce uranium metal, which has direct relevance to nuclear weapons development," U.S. State Department spokesperson Ned Price said in a statement. "Iran should cease its nuclear escalations and return to negotiations toward full implementation" of the nuclear agreement, he said. Reporting by Francois Murphy; Editing by Alison Williams and Sam Holmes Our Standards: The Thomson Reuters Trust Principles.