US president signs Iran sanctions bill

US President Barack Obama has ordered tough new sanctions against Iran's central bank and financial sector, ushering in the sharpest yet economic confrontation between Washington and Tehran yet and potentially stoking tensions in the Gulf.

The measures are in retaliation for Iran's nuclear programme as part of a $662 billion defense bill that require foreign firms to make a choice between doing business with Tehran's oil and financial sectors or central bank, or the US economy and financial sector.

Foreign central banks which deal with the Iranian central bank on oil transactions could also face similar restrictions under the new law, which has sparked fears of damage to US ties with nations like Russia and China.

Obama however said in a statement that he was concerned the measure would interfere with his constitutional authority to conduct foreign relations by tying his hands in dealings with foreign governments.

The bill however allows Obama the power to grant 120-day waivers if he judges it to be in the national security interests of the United States.

The EU remains open to talks with Iran, after ambassador Ali Reza Sheikh Attar announced that Iran's top nuclear negotiator, Saeed Jalili, is to send a letter soon to EU foreign policy chief Catherine Ashton to arrange a new round of negotiations over the country's disputed nuclear programme.

All talks between Iran and major powers, including the latest round in January in Istanbul, have failed so far to achieve any tangible result. The main reason is that Iran has constantly rejected the key Western demand - suspension of its uranium enrichment plan as a sign of goodwill until the peaceful nature of the Iranian nuclear programmes are proven.