TEHRAN, Iran — President Mahmoud Ahmadinejad threatened unspecified economic retaliation against European countries that follow the U.S. in imposing unilateral sanctions against Iran, state radio reported Thursday.

A senior U.S. official, meeting in Vienna with the head of the International Atomic Energy Agency, warned that Iran faces increased isolation and heightened sanctions if it continues to defy the international community, adding that he hopes the Islamic Republic will choose to negotiate.

The United States last week prohibited American companies from working with the Iranian companies linked to the Revolutionary Guards, an elite force with extensive holdings in oil, construction and other sectors. The U.S. also put pressure on international firms and banks not to deal with the companies.

"If they plan to cooperate with the enemy of the Iranian nation, we cannot interpret this as a friendly behavior. We will show reaction," the radio quoted Ahmadinejad as saying of the Europeans. "You, Europeans, know well what will happen in the economic sphere if Iran takes a serious move in this matter," the Iranian leader said.

Ahmadinejad spoke after a ceremony inaugurating a petrochemical complex in the southern port of Asalouyeh, some 940 miles south of the capital, Tehran.

IRNA, the state official news agency, also quoted Ahmdinejad as saying: "You, Europe, need us more" — a veiled reference to business ties between Tehran and European nations.

According to official statistics Europe is Iran's largest trading partner, with over 40 percent of Iran's imports coming from European Union countries. Also, many European energy companies have been working in Iran's attractive energy market, which is the second-largest oil producer among OPEC countries.

U.S. Undersecretary of State Nicholas Burns said the U.S. wants the European Union to push forward with further sanctions against Iran, and urged Iran's major trading partners to cut back business with Tehran to send a strong message

He told reporters that Washington wants a third set of U.N. Security Council sanctions as soon as possible.

"Our view is that all of that should happen as soon as possible so that Iran gets the message that as long as it's defying the Security Council, which it currently is, and not cooperating fully with the IAEA ... then there's going to be a price to what Iran does," he said. "And that price will be increased isolation and heightened sanctions."

Burns noted that Iran did not accept an offer last week from EU chief negotiator Javier Solana for further talks, saying Tehran had "chosen the route of sanctions."

"We hope that Iran will reconsider, suspend its enrichment program and come to negotiations with the United States and with the other countries" on the Security Council, Burns said.

"That offer is on the table but Iran continues to refuse it," he said.

The U.S. and some of its allies claim Iran's controversial nuclear program masks attempts to produce a nuclear weapon. Tehran denies it is seeking nuclear arms and maintains its uranium enrichment program aims only to produce electricity.

Iran is counting on international support from Russia and China — permanent U.N. Security Council members — to prevent harsher U.N. sanctions. The U.N. has imposed two rounds of limited sanctions for Iran's refusal to suspend uranium enrichment, a process which can be used for both nuclear fuel for electricity power plant and weapon.

Russia and China have resisted a third round of sanctions.

The Iranian president's comments came a day after the head of the Revolutionary Guards warned the U.S. against attacking the Islamic Republic, saying if it did, Washington would be "stuck in a quagmire" worse than Iraq or Afghanistan.

Mohammad Ali Jafari, the Guards commander, said Wednesday his forces were prepared to strike back with a "crushing response" if attacked, according to the semiofficial Fars news agency.

Concerns have been mounting in recent months that the United States might attack to prevent Iran from developing atomic bombs. The U.S. has said it is trying to resolve its disputes with Iran diplomatically but also says it has not ruled out any options.