* Iran says will sell oil in breach of curbs
* Main target is ordinary Iranians-Rouhani
* Oil customer China regrets U.S. move
* Iran holds air defence drills
* US aims to undermine Iranian sway in region
* Pompeo says curbs are toughest ever on Iran
* Iran leaders “just want to survive”-Trump (Adds Swiss talks, air defence, Rouhani quote, oil prices)
By Lesley Wroughton and Parisa Hafezi
WASHINGTON/DUBAI, Nov 5 (Reuters) - Iran said it would defy U.S. sanctions reimposed on it by Washington on Monday, denouncing as “economic war” the U.S. attempt to curb Tehran’s missile and nuclear programs and weaken its influence in the Middle East.
The U.S. move restores sanctions lifted under a 2015 nuclear deal negotiated by the administration of President Barack Obama and five other world powers. It adds 300 new designations in Iran’s oil, shipping, insurance and banking sectors.
European powers which continue to back the nuclear deal said they opposed the reimposition of sanctions and major oil buyer China said it regretted the move.
The restoration of sanctions is part of a wider effort by U.S. President Donald Trump to force Iran to further limit its nuclear work and to halt and missile program as well as its support for proxy forces in Yemen, Syria, Lebanon and other parts of the Middle East.
Switzerland said it is holding talks with the United States and Iran about launching a humanitarian payment channel to help food and drugs keep flowing to Tehran.
U.S. sanctions permit trade in humanitarian goods such as food and pharmaceuticals, but measures imposed on banks and trade restrictions could make such items more expensive.
U.S. Secretary of State Mike Pompeo said on Sunday the penalties set to return on Monday “are the toughest sanctions ever put in place on the Islamic Republic of Iran”.
However, Iran’s clerical rulers have dismissed concerns about the impact of sanctions on the economy.
“Today the enemy (the United States) is targeting our economy...the main target of sanctions is our people,” Iranian President Hassan Rouhani said.
“America wanted to cut to zero Iran’s oil sales...but we will continue to sell our oil...to break sanctions,” Rouhani told economists.
The sanctions were illegal and unfair, he said.
“This is an economic war against Iran but... America should learn that it cannot use the language of force against Iran ... We are prepared to resist any pressure,” Rouhani said.
Reiterating Iran’s position that the Trump administration is not a trustworthy partner for talks, Rouhani said: “Holding talks is not an issue for us - only if the other party respects its commitments and promises.”
Trump announced in May his government was withdrawing from what he called the “worst ever” agreement negotiated by the United States. The other parties to the deal - Britain, France, Germany, China and Russia - say they will not leave.
The deal had seen most international financial and economic sanctions on Iran lifted in return for Tehran curbing its disputed nuclear activity under U.N. surveillance.
Details of the sanctions will be released at a news conference scheduled for 8:30 a.m. EST (1330 GMT) with Pompeo and Treasury Secretary Steven Mnuchin.
The European Union, France, Germany and Britain said in a joint statement that they regretted the U.S. decision and would seek to protect European companies doing legitimate business with Tehran.
China, India, South Korea, Japan and Turkey - all top importers of Iranian oil - are among eight countries expected to be given temporary exemptions from the sanctions to ensure crude oil prices are not destabilised.
The countries will deposit Iran’s revenue in an escrow account, U.S. officials have said.
News of the waivers helped lower oil prices early on Monday, since they allow major buyers to import Iran’s oil for a while. Brent crude was down 15 cents a barrel at $72.68 by 1030 GMT. U.S. light crude CLc1 was 30 cents lower at $62.84.
Rouhani said even without the waivers Iran would still be able to sell its oil, semi-official Tasnim news agency reported.
The Iranian military launched two days of air defence drills on Monday across northern Iran, and state TV aired footage of surface-to-air missiles and air defence systems. Iran’s elite Revolutionary Guards Corps are among the forces participating.
The curbs come as the United States is focused on U.S. congressional and gubernatorial elections on Tuesday. Campaigning in Chattanooga, Tennessee, on Sunday, Trump said his “maximum pressure” against Iran was working.
“Iran is a much different country than it was when I took office,” said Trump, adding: “They wanted to take over the whole Middle East. Right now they just want to survive.”
To keep the deal alive, the remaining parties to the Iran accord are trying to maintain trade with Tehran, despite scepticism that this is possible.
Diplomats told Reuters last month that a new EU mechanism to facilitate payments for Iranian oil exports should be legally in place by Nov. 4 but not operational until early next year.
They cautioned, however, that no country had volunteered to host the entity, which was delaying the process.
Editing by William Maclean and Angus MacSwan