"VIENNA (Reuters) - Iran has sharply stepped up its controversial uranium enrichment drive, a United Nations watchdog report showed on Friday, a defiant move certain to further fuel Western alarm about the Islamic Republic's atomic aims. The International Atomic Energy Agency (IAEA), in a confidential document, also reported its failed mission to Tehran this week to try and get Iran to respond to allegations of research relevant for the development of nuclear weapons. The setback increased worries about a downward spiral towards conflict between Iran and the West, and sent oil prices higher. "The Agency continues to have serious concerns regarding possible military dimensions to Iran's nuclear program," the Vienna-based U.N. body said in its latest quarterly report about Iran's atomic activities. The IAEA report to member states showed Iran had carried out a significant expansion of activities at its main enrichment plant near the central city of Natanz, and also increased work at the Fordow underground facility."