The European sanctions - including a ban on imports of Iranian oil by EU states and measures that make it difficult for other countries to trade with Iran - were enacted earlier this year but mainly came into effect on July 1.
They are designed to break Iran's economy and force it to curb nuclear work that Western countries say is aimed at producing an atomic weapon. Reporting by Reuters has shown in recent months that the sanctions have already had a significant effect on Iran's economy.
Israel says it could attack Iran if diplomacy fails to force Tehran to abandon its nuclear aims. The United States also says military force is on the table as a last resort, but U.S. officials have repeatedly encouraged the Israelis to be patient while new sanctions take effect.
Washington said the EU's oil ban might force Tehran to give ground at the next round of nuclear talks, scheduled for this week in Istanbul.
Announcing three days of missile tests in the coming week, Revolutionary Guards General Amir Ali Hajizadeh said the exercises should be seen as a message "that the Islamic Republic of Iran is resolute in standing up to ... bullying, and will respond to any possible evil decisively and strongly."
Any attack on Iran by Israel would be answered resolutely: "If they take any action, they will hand us an excuse to wipe them off the face of the earth," said Hajizadeh, head of the Guards' airborne division, according to state news agency IRNA.
The missile tests will target mock-ups of air bases in the region, Hajizadeh said, adding that its ability to strike U.S. bases in the Gulf protects Iran from U.S. support for Israel.
"U.S. bases in the region are within range of our missiles and weapons, and therefore they certainly will not cooperate with the regime (Israel)," he told IRNA.
Iran has repeatedly unnerved oil markets by threatening reprisals if it were to be attacked or its trade disrupted.
The threat against the Jewish state echoed words President Mahmoud Ahmadinejad spoke in 2005, saying Israel "must be wiped off the page of time" - a phrase often translated as "wiped off the map" and cited by Israel to show how allowing Iran to get nuclear arms would be a threat to its existence.
The EU ban on Iranian oil imports directly deprives Iran of a market that bought 18 percent of its exports a year ago. The sanctions also bar EU companies from transporting Iranian crude or insuring shipments, hurting its trade worldwide.
"They signal our clear determination to intensify the peaceful diplomatic pressure," British Foreign Secretary William Hague said in a statement.
The EU sanctions come alongside stringent new measures imposed by Washington this year on third countries doing business with Iran. The United States welcomed the EU sanctions as an "essential part" of diplomatic efforts "to seek a peaceful resolution that addresses the international community's concerns about Iran's nuclear program."
White House spokesman Jay Carney said he hoped the sanctions would force Tehran to make concessions in technical-level talks with six world powers later this week.
MALICIOUS POLICIES
"Iran has an opportunity to pursue substantive negotiations, beginning with expert level talks this week in Istanbul, and must take concrete steps toward a comprehensive resolution of the international community's concerns with Iran's nuclear activities," Carney said in a statement.
The United Arab Emirates and Bahrain - foes of Iran which face it across the oil-rich Gulf - announced their own joint air force exercises on Sunday which they said would take "several days," their state news agencies reported.
In three rounds of talks between Iran and the United States, Russia, China, Britain, France and Germany, the Western powers have demanded Tehran halt high-grade uranium enrichment, ship out all high-grade uranium and close a key enrichment facility.
The talks lost steam at the last meeting in Moscow last month and there was not enough common ground for negotiators to agree whether to meet again. Officials - but not political decision-makers - meet in Turkey on Tuesday.
Washington sees the sanctions and talks as a potential way out of the standoff to avert the need for military action, but has not said it would block Israel from attacking Iran.
Tehran says it has a right to peaceful nuclear technologies and is not seeking the bomb. It accuses nuclear-armed states of hypocrisy. Officials said they were taking steps to reduce the economic impact of the new sanctions.
"We are implementing programs to counter sanctions and we will confront these malicious policies," Mehr news agency quoted Iranian central bank governor Mahmoud Bahmani as saying.
Bahmani has struggled to prevent a plunge in the value of the rial currency and steadily rising inflation as the sanctions have taken effect. He said the effects of the sanctions were tough but that Iran had built up $150 billion in foreign reserves to protect its economy.
Oil Minister Rostam Qasemi said oil importing countries would be the losers if the sanctions lead to price rises.
"All possible options have been planned in government to counter sanctions," Qasemi said on the ministry's website.
Last Friday, another Revolutionary Guards commander, Ali Fadavi, said Iran would equip its ships in the Strait of Hormuz - the neck of the Gulf and a vital oil transit point - with shorter-range missiles.
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