VIENNA — Iran has set up new equipment that will allow it to boost its efficiency at enriching uranium at higher levels, diplomats said Friday. The move is likely to give the US more leverage with Russia and China in its push for new UN sanctions on Teheran.Iran's clandestine enrichment activities were discovered eight years ago and have expanded since to encompass thousands of centrifuges churning out material enriched to 3.5 percent. But despite three rounds of Security Council sanctions meant to enforce demands of a freeze, Teheran moved to a new level in February, when it set up a small program to produce material enriched to near 20 percent.Teheran denies any interest in developing nuclear arms and says it needs the higher enriched uranium to supply its research reactor with fuel after a UN-supported deal to provide the material from abroad fell apart. But the move has increased concerns because it brings the Islamic Republic closer to the ability to produce warhead material.Uranium at 3.5 percent, can be used to fuel reactors — which is Iran's avowed purpose for enrichment. If enriched to around 95 percent, however, it can be used in building a nuclear bomb, and at 20 percent, uranium can be turned into weapons-grade material much more quickly than from lower levels.The 20-percent uranium is being produced by a "cascade" — 164 centrifuges hooked up in series. The diplomats said that Iranian technicians had in recent weeks assembled another 164-centrifuge cascade and the throw of a switch appeared ready to activate it to support the machines already turning out small amounts of near 20-percent uranium.One of the diplomats, from a member country of the International Atomic Energy Agency, said the new cascade is meant to reprocess the waste produced by the equipment now in operation and produce more enriched material from it.An IAEA-backed plan that offered nuclear fuel rods for Teheran's research reactor in exchange for most of Iran's stock of lower-level enriched uranium initially raised Western hopes that it could temporarily curb Iran's capacity to make a nuclear bomb. But it hit a dead end last year after Iran rejected it, though the country's leaders have since tried to keep the offer on the table, proposing variations without accepting the original terms. As the standoff continues, Russia and China — two veto-wielding Security Council members normally against sanctions — are signaling increased willingness to support a new round of UN penalties meant to punish the Iranian government for its nuclear defiance.At UN headquarters on Thursday, US Ambassador Susan Rice said that talks on a US-drafted sanctions resolution are making "good progress."Diplomats familiar with the negotiations said a draft resolution could be circulated to all Security Council nations — permanent members the US, Britain, China, France and Russia and 10 elected countries — before the end of the month.