Tehran, Nov 4 (AFP) With anti-American slogans and effigies mocking President Donald Trump, thousands rallied outside the former US embassy in Tehran on Monday to mark the 40th anniversary of the Iran hostage crisis.

Rallies also took place in several other cities four decades to the day after revolutionary students stormed the complex and seized dozens of American diplomats and embassy staff -- an event that still strains ties.

"They will continue their enmity against us. They are like a lethal scorpion whose nature is to have a poisonous sting," the head of the army, General Abdolrahim Mousavi, said in a speech in Tehran.

"We are ready to crush this scorpion and will also pay the price." He slammed the idea of interacting with the United States as a ruse, echoing recent remarks by Iran's supreme leader Ayatollah Ali Khamenei.

Words like negotiation are a "gift wrapping ... hiding the discourse of submission and defeat," Mousavi said, adding that the only way forward is "to maintain the revolutionary spirit through prudence and obeying the leader".

Replica missiles and the same type of air defence battery used to shoot down a US drone in June were put on display outside the former embassy turned museum in Tehran.

Iranians massed in front of the building carrying placards with slogans such as "Down with USA" and "Death to America", reported AFP journalists at the scene.

"We will sacrifice our lives and existence for the leader and this system, and we will not be intimated by our enemy, which is America," Sajad Shirazi, a stonecutter, told AFP at the rally.

Rallies were also reported in the cities of Mashhad, Shiraz and Esfahan, among others, with the Mehr news agency estimating "millions of people" attended across the country, though this could not be verified.

State TV aired segments of a Canadian documentary titled "The Fire Breather" showing Trump's controversial 2016 campaign trail highlights and biting comments about his past alongside images of the rallies.

On November 4, 1979, less than nine months after the toppling of Iran's American-backed shah, students overran the embassy complex to demand the United States hand over the ousted ruler after he was admitted to a US hospital.

It took 444 days for the crisis to end with the release of the last 52 Americans, but the US broke off diplomatic relations with Iran in 1980 and ties have been frozen ever since.

The 40th anniversary comes at a time of escalating tensions between Tehran and Washington and also the region.

"This may be the best time to say 'Down with the US'," said a state TV reporter at the rally.

Trump withdrew the United States from a landmark 2015 nuclear deal between Iran and world powers last year and reimposed punishing sanctions.

Tehran has hit back with three countermeasures since May reducing parts of its compliance with the deal.

Iran also announced a Monday a more than tenfold increase in enriched uranium production. It is expected to unveil the next countermeasure the day after.

"Americans, at the time (of the embassy takeover) believed they were an exceptional nation, able to commit any injustice anywhere," government spokesman Ali Rabiei told the press on Monday.

"America's problem is still this sense of exceptionalism. It allows itself to trample international law and commit the worst crimes against nations with no fear of an international backlash," he added.

The arch-foes came to the brink of a military confrontation in June when Iran downed a US Global Hawk drone and Trump ordered retaliatory strikes before cancelling them at the last minute. (AFP)

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