Europe rejects Iran ‘ultimatum’ but stands by nuke deal

European powers on Thursday rejected "ultimatums" from Tehran but vowed to fight to save the Iran nuclear deal, as tensions with the US soar.

Iran said it would defy some restrictions agreed under the 2015 accord and threatened to go further if Europe, China and Russia fail to deliver sanctions relief within 60 days.

Tehran says it is responding to unilateral US sanctions imposed by Washington after President Donald Trump ripped up what he called a "horrible" deal, dealing a severe blow to the Iranian economy.

Europe has stressed the importance of the deal -- in which Iran agreed to curb its nuclear ambitions in return for sanctions relief -- for its own security, and EU president Jean-Claude Juncker said it would be on the agenda at Thursday's summit in the Romanian town of Sibiu.

EU diplomatic chief Federica Mogherini and France, Germany and Britain -- the three European signatories to the deal -- voiced "great concern" at President Hassan Rouhani's dramatic intervention.

"We strongly urge Iran to continue to implement its commitments under the JCPOA in full as it has done until now and to refrain from any escalatory steps," they said in a joint statement, referring to the Joint Comprehensive Plan of Action.

"We reject any ultimatums and we will assess Iran's compliance on the basis of Iran's performance regarding its nuclear-related commitments under the JCPOA." Arriving at the Sibiu summit, Austrian chancellor Sebastian Kurz told reporters: "To be honest, we have a different approach than the US has.

"We still think that the deal with the Iranians was a chance to bring Iran out of isolation. But of course we realise and we see that the US has a totally different approach and that is why it will stay a difficult issue." The EU statement stressed the International Atomic Energy Agency's (IAEA) role in monitoring Iran's compliance with the deal -- suggesting no concrete action is likely until the inspectors' next report at the end of May.

But there are tensions within the EU, with some countries under domestic pressure to take a tougher line on Tehran, particularly after Iranian intelligence was accused over assassination plots in France, Denmark and the Netherlands.

Europe and Washington have been at loggerheads over how to deal with the Islamic republic since Trump took office. In recent days, the US deployed an aircraft carrier strike group to the Gulf -- raising military tensions alongside the diplomatic discord.

Trump hit back at Tehran's threats by tightening the economic screws further, slapping sanctions on the Iranian mining industry The White House, which has already taken steps to scupper Iran's oil exports -- its crucial money-maker -- said the steel and mining sector was the country's second-largest source of foreign revenue, accounting for 10 per cent of exports.

"Tehran can expect further actions unless it fundamentally alters its conduct," Trump said in a statement.

Since the US pullout, Europe has sought to keep Iran in the deal by trying to maintain trade via a special mechanism called INSTEX to clear payments without falling foul of American sanctions.

The European statement reiterated its commitment to helping the Iranian people enjoy the benefit of sanctions relief, condemning the US reimposition.

Europe is "determined to continue pursuing efforts to enable the continuation of legitimate trade with Iran" including through INSTEX.

But their efforts have borne little fruit so far, with Iran's Supreme Leader Ayatollah Ali Khamenei dismissing them as a "bitter joke." French President Emmanuel Macron and Germany Chancellor Angela Merkel will discuss Iran with their EU colleagues at Thursday's summit called originally to start the race for the top jobs in Brussels and sketch a future without Britain.

The 27 national leaders are meeting just two weeks before European Parliament elections that could usher in a new wave of populists to haunt EU decision-making.

The 28th head of government, Britain's Prime Minister Theresa May, will be absent as the others discuss a five-year strategy to reinvigorate the union and argue over who should lead it.

The meeting will seek to agree a "Sibiu Declaration" -- a short document with 10 overarching commitments to reform in various areas, known tongue-in-cheek by some Brussels diplomats as the "10 Commandments" for the next EU Commission.

There will also be an outline "strategic agenda", prepared by EU Council president and summit host Donald Tusk, which will be discussed in more detail so that the leaders can ratify the plan at their June summit.

The other main issue on the table, and which has gripped discussions in the Brussels corridors of power, is the five-yearly renewal of the top EU jobs.

Immediately after the May 23 to 26 parliamentary elections, leaders will begin haggling over who gets to lead the European Commission, the bloc's executive, and the European Council, which represents national leaders.