The new EU sanctions, which will come into force in the next few weeks, will include a ban on the sale of equipment, technology and services to Iran's energy sector and come a month after the United States passed similar sanctions.

Move criticised

Ramin Mehmanparast, an Iranian foreign ministry spokesman, denounced the EU decision.

"Moving toward confrontational measures and supporting unilateral actions and damaging the atmosphere are not considered by us to be a good use of the opportunity," he said.

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The latest EU and US restrictions come on top of a fourth round of sanctions imposed last month by the United Nations Security Council.

Western powers believe Iran is trying to develop nuclear weapons, but Tehran insists its nuclear programme has purely peaceful intentions.

The Security Council endorsed the latest round of sanctions after failing to get Iran to accept a UN-drafted plan to swap its low-enriched uranium for higher-enriched uranium in the form of fuel rods it needs for a medical research reactor.

Iran, Turkey and Brazil announced their own fuel-swap dealon May 17, but it was cold-shouldered by other members of the international community.

One day after the announcement, US Secretary of State Hillary Clinton told Congress that the permanent members of the Security Council had agreed to push forward a fourth round of sanctions, while the White House said it still had "serious concerns" about Iran's nuclear programme.

Iran responds

Iran, meanwhile, has sent a letter to the International Atomic Energy Agency stating that it is ready to resume negotiations about a nuclear fuel swap without any preconditions, according to the country's state media.

Iran's Monday letter to the IAEA represents a response to those concerns.

"We are ready to resume negotiations on [a] nuclear fuel swap deal as a humanitarian project within IAEA activities without any preconditions," Iran's envoy to the IAEA, Ali-Asghar Soltaniyeh, said according to the Islamic Republic News Agency (IRNA).

The IAEA confirmed it had received the letter and had relayed the message to Brazil, Turkey and the other members of the "Vienna Group" - Russia, France and the United States.

Speaking after the EU council meeting, Catherine Ashton, the union's foreign affairs chief, said she welcomed the news of Iran's letter but needed to "study the details".

The IAEA declined to comment about the letter's content, and it remained unclear whether Iran had addressed major concerns, including whether it would continue to enrich its uranium up to 20 per cent - a violation of Security Council resolutions - and whether it would agree to more inspections and an overall discussions of its entire nuclear programme.

Soltaniyeh said that IAEA Chief Yukiya Amano "welcomed Iran’s response and underlined that he will fully back the move and will do his best to hold the meeting on nuclear swap deal at the earliest opportunity," according to IRNA.

'Dramatic effects'

Laurence Lee, Al Jazeera's correspondent in Brussels, said the EU sanctions could dramatically affect the Iranian economy.

"As well as things like stopping Iranian banks with links to the Revolutionary Guard from operating in Europe, the key thing is that in the future, European countries, which have very strong ties to Iran, won't be able to offer technical assistance to Iran in things like refining oil," he said.

"Iran is a major producer of oil, but doesn't refine it very well ... [the sanctions] will dramatically affect the Iranian economy."

Canada on Monday also imposed similar sanctions, including a ban on any new Canadian investment in Iran's oil and gas sector and restrictions on exporting goods that could be used in nuclear programs.

Iranian banks will also will be barred from opening branches in Canada and Canadian banks will not be able to operate in Iran.