DUBAI, Dec 31 (Reuters) - President Hassan Rouhani ordered his defence minister on Thursday to expand Iran's missile programme, in response to a U.S. threat to impose sanctions over a ballistic missile test Iran carried out in October.

"As the U.S. government is clearly still pursuing its hostile policies and illegal meddling ... the armed forces need to quickly and significantly increase their missile capability," Rouhani wrote in a letter to Defence Minister Hossein Dehghan, published on the state news agency IRNA.

U.S. President Barack Obama's administration is preparing new sanctions against international companies and individuals over Iran's ballistic missile program, sources familiar with the situation said on Wednesday. (Reporting by Sam Wilkin; Editing by Kevin Liffey)

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