US President Barack Obama Saturday signed into law tough new sanctions targeting Iran's central bank and financial sector, in a move likely to deepen acrimony between Washington and Tehran.

The measures, meant to punish the Islamic Republic for its nuclear program, were contained in a $662 billion defense bill, which officials said Obama signed despite concern it could complicate his bid to build an international front against Tehran.

The sanctions require foreign firms to make a choice between doing business with Tehran's oil and financial sectors or central bank or the mighty US economy and financial sector.

Foreign central banks which deal with the Iranian central bank on oil transactions could also face similar restrictions under the new law, which has sparked fears of damage to US ties with nations like Russia and China.

Obama said in a statement issued as he signed the bill that he was concerned the measure would interfere with his constitutional authority to conduct foreign relations by tying his hands in dealings with foreign governments.

The bill, which passed with wide majorities in Congress, did reserve some wiggle room for Obama, granting him the power to grant 120 day waivers if he judges it to be in the national security interests of the United States.