Iran tested more missiles in the Gulf on Thursday, state media said, and the United States pledged to defend its allies against any Iranian aggression.
Washington, which fears Tehran wants to master technology to build nuclear weapons, said after Iran test-fired nine missiles on Wednesday that Tehran should halt further tests if it wanted to gain the world's trust.
Speculation that Israel could bomb Iran has mounted since a big Israeli air drill last month. U.S. leaders have not ruled out military options if diplomacy fails to end the nuclear row.
Iran has responded by saying it will strike back at Tel Aviv, as well as U.S. interests and shipping, if it is hit. Tehran insists its nuclear programme has only civilian goals.
Iran has said missiles fired during wargames under way in the Gulf included ones that could hit Israel and U.S. bases.
U.S. Secretary of State Condoleezza Rice said on a visit to the former Soviet republic of Georgia that Washington would defend American interests and those of its allies.
"We take very, very strongly our obligation to help our allies defend themselves and no one should be confused about that," Rice said after meeting Georgian President Mikheil Saakashvili.
After Iran's missile tests on Wednesday, Rice suggested its actions justified U.S. plans for an anti-missile shield with bases in eastern Europe, a project Russia strongly opposes.
Iranian state TV and radio said the Revolutionary Guards - the ideologically driven wing of Iran's armed forces - fired ground-to-sea, surface-to-surface and sea-to-air missiles overnight. Long-range missiles were also launched.
CHINA URGES RESTRAINT
"The . manoeuvre brings power to the Islamic Republic of Iran and is a lesson for enemies," Guards Commander-in-Chief Mohammad Ali Jafari was quoted as saying.
Iran has threatened to shut the Strait of Hormuz, a vital route for Gulf oil exports, if it is attacked. Thursday's exercises involved divers and speedboats, as well as the launch of a high-speed torpedo called Hout, state media said.
Wednesday's tests rattled global oil markets, pushing up the price of oil. Crude prices have dipped in recent days but have hit a series of record highs this year partly on Iran tensions.
China urged restraint in the row over Iran's nuclear programme but avoided direct condemnation of Tehran for test- firing the missiles. Wednesday's missile manoeuvres had drawn criticism from the United States and European countries.
"We express our concern about these developments," Chinese Foreign Ministry spokesman Liu Jianchao told a news conference when asked about Iran's missile tests.
Liu welcomed the prospect of fresh talks on the nuclear programme being pursued by Iran, the world's fourth largest oil producer and China's third biggest crude supplier.
The United States, Britain, France, Germany, Russia and China have offered Iran incentives to curb its nuclear work. Tehran rejects their demand that it suspend uranium enrichment.
The European Union's foreign policy chief, Javier Solana, representing the six powers, is expected to meet Iranian officials to discuss Iran's response to the package. Solana's spokeswoman said on Wednesday no place or date had been set.
Russia, which is building Iran's first and so far only nuclear power plant, and China have been resisting U.S.-led calls for expanding U.N. sanctions on the Islamic Republic.
Sanctions have made Western firms increasingly wary about investing. France's Total said on Thursday it would not invest for now in a big gas deal due to political tensions.
Iran has brushed off the impact of Western caution saying it has a big enough cash pile from windfall oil earnings to carry out the project itself or find other interested parties.
"This is our message. We will proceed with development with or without them," Iranian Oil Minister Gholamhossein Nozari told journalists when asked about the latest comments from Total.
