'We'll arm our missiles' - N Korea hits back

SEOUL - North Korea is threatening to put nuclear warheads on missiles and conduct more atom bomb tests, raising the stakes in its stand-off with the United States and the world.

The threats were made by a North Korean official, who said his country would return to disarmament talks only if the US made concessions.

"We are still willing to abandon nuclear programmes and return to six-party talks," South Korea's Yonhap news agency quoted a North Korean official as saying.

"We can do that only if the United States takes corresponding measures," the unidentified official said.

Analysts say North Korea's announcement that it had conducted an underground nuclear test may have been a ploy to end a US crackdown on its finance and start one-on-one negotiations.

But instead of making concessions, the United States and Japan - a traditional target for North Korean hostility - urged the United Nations to impose harsh sanctions.

Even South Korean President Roh Moo-hyun said he would review his "sunshine policy" of engagement with the reclusive state. Newspaper commentators slammed him for being too soft. One said the country was in its worst crisis since the Korean War of the early 1950s.

China joined a world chorus of condemnation, but President Hu Jintao - feted as a friend when he visited North Korea last year - said there was still room for negotiations to end Pyongyang's nuclear arms ambitions.

The yen hit an eight-month low against the dollar yesterday after speculation that North Korea had conducted a second test.

But South Korean Unification Minister Lee Jong-seok said there were no signs of a follow-up test.

The United States has drafted a UN resolution calling for international inspections of all cargo into and out of North Korea to detect weapons-related material.

It also sought a freeze on transfers or development of weapons of mass destruction, and a ban on luxury goods.

The resolution was to be discussed by the Security Council today.

Japan proposed other, more stringent, steps, including banning North Korean ships and planes from all ports if they carried nuclear or ballistic missile-related materials.

Japan froze remittances and transfers to North Korea by those suspected of being involved in the development of weapons of mass destruction after missile tests by Pyongyang in July.

But officials in Tokyo said that, before adding fresh sanctions, Japan wanted confirmation of whether the underground test declared by North Korea did take place.

"This is an especially grave threat and challenge to the security of our nation," said Japanese Prime Minister Shinzo Abe. "Should we confirm this, we need to swiftly take our own tough measures against North Korea."

A US official said it could take several days for intelligence analysts to determine whether a seismic disturbance in an area near North Korea's border with China was an unsuccessful nuclear test, a small nuclear device or a non-nuclear explosion.

"If it was a nuclear test, it appears to be more of a fizzle than a pop," he said.

Officials in Japan and South Korea reported no changes in radiation levels since the north's announcement.

Analysts say North Korea probably has enough nuclear material to make six to eight bombs but probably lacks the technology to make one small enough to mount on a missile.

US Democrats, eager to oust Republicans from control of Congress in next month's mid-term elections, were quick yesterday to accuse President George W. Bush of being in a state of denial about North Korea as he pursued a war in Iraq.

- REUTERS