North Korea may launch long-range missile in weeks: report

SEOUL (Reuters) - North Korea may this month test a missile designed to fly as far as U.S. territory and may also be gearing up for skirmishes with the South around their disputed sea border, South Korean media reported on Monday.

Last week, North Korea conducted a nuclear test that put it closer to having a working atomic bomb, test-fired a barrage of short-range missiles and threatened to attack the South, raising tension to one of its highest levels since the 1950-53 Korean War.

In a move that could cause further diplomatic friction, North Korea will put on trial on Thursday two U.S. journalists it arrested on its border with China several months ago and charged with committing "hostile acts."

Analysts see Pyongyang's growing belligerence as an attempt to bolster the position of leader Kim Jong-il, whose suspected stroke last August raised questions about his grip on power.

The isolated and impoverished state's actions are also seen as bids to improve its weaponry and put pressure on regional powers to consider giving it money in exchange for disarmament.

North Korea is preparing to launch an intercontinental ballistic missile (ICBM) with an estimated range of 2,500-4,000 miles from a west coast base, the daily JoongAng Ilbo cited South Korean intelligence sources as saying.

"Preparations for the launch are likely to be completed in mid-June," one intelligence source said. Government officials would not confirm the reports.

Train cars carrying a missile left about two weeks ago for a missile base on the North's west coast, the sources said.

Investors said recent developments have raised concern about the threat posed by the North, but they have not had a sustained impact on financial markets and indeed foreign investors have been net buyers of Seoul shares for 12 consecutive sessions.

Ratings agency Moody's said a rocket launch in April and last month's nuclear test showed the risks posed to the region, but added: "We also consider that the stable outlook on South Korea's A2 sovereign ratings remains appropriate."

The main South Korean index has risen by about 9 percent since the rocket launch.

TROUBLES AT SEA

The prickly communist state has threatened to test-fire an ICBM if the U.N. Security Council does not apologize for tightening sanctions after the April rocket launch.

The United States and Japan agreed on Monday they cannot accept a nuclear-armed North Korea, saying they were deeply concerned about recent "destabilizing" actions by the state.

"We absolutely cannot accept that North Korea will have nuclear weapons," Japanese Vice Foreign Minister Mitoji Yabunaka, said after meeting U.S. Deputy Secretary of State Jim Steinberg.

In Washington, White House spokesman Robert Gibbs said the Obama administration's biggest concern would be if North Korea gave nuclear weapons to others.

However, U.S. Defense Secretary Robert Gates said during a visit to Manila that Washington was not in a hurry to look for options other than the now-stalled six-party talks on North Korea to get Pyongyang to abandon its nuclear program.

Last week, U.S. officials said Gates had told his South Korean and Japanese counterparts that while diplomacy was preferred in dealing with North Korea, other steps may be considered.

Western diplomats said Russia and China have agreed in principle that North Korea should be sanctioned for its nuclear test, but it is not clear what penalties they would back at the United Nations. Both are generally reluctant to back sanctions.

A meeting at U.N. headquarters of the five permanent Security Council members -- United States, Russia, China, Britain and France -- plus Japan and South Korea on a North Korea resolution yielded no breakthroughs. French envoy Jean-Pierre Lacroix told reporters afterward he hoped a draft resolution would be ready by later this week.

China's U.N. Ambassador Zhang Yesui said, "I don't know how much time is needed," adding that the seven countries were discussing "many, many options." Without giving details, U.S. Ambassador Susan Rice said, "We're making progress."

U.S. State Department spokesman Robert Wood said Secretary of State Hillary Clinton had a "positive and productive" telephone call with Russian Foreign Minister Sergei Lavrov on North Korea and they discussed "a package of concrete measures that will show the DPRK that actions have consequences."

China, the closest that North Korea can claim as a major ally, appears to have temporarily suspended sending delegations to the North in a sign of displeasure over its recent saber rattling, the South's Yonhap news agency quoted unnamed diplomatic sources in Beijing as saying.

April's rocket launch was widely seen as a disguised test of North Korea's long-range Taepodong-2 missile, violating U.N. resolutions banning the country from ballistic missile launches.

That rocket splashed down in the Pacific Ocean after flying some 1,900 miles, experts said, indicating the North needed further testing to perfect its ICBM technology. The Alaskan coast is about 3,000 miles from North Korea while the U.S. West Coast is at least 5,000 miles away.

"The launch of what North Korea called a satellite in April failed to show intercontinental capabilities, so they want to show it this time around," said Kim Tae-woo, a weapons expert at the Korea Institute for Defense Analysis.

North Korea has not mastered the technology of miniaturizing a nuclear warhead to mount on a missile, weapons experts say.

In what could set the stage for further provocations, North Korea has declared a wide area of Yellow Sea waters off its west coast off limits until the end of July because it may be preparing for a clash with the South, a report in South Korea's biggest newspaper, the Chosun Ilbo, said.

The South Korean government has informed Japan's Coast Guard that North Korea has set up a "no navigation zone" in the Yellow Sea for June 13-June 14 between 8 a.m. and 7 p.m. (2300 GMT-1000 GMT), Japan Coast Guard spokesman Masahiro Ichijo said, without giving reasons for the warning.

(Additional reporting by Kim Junghyun and Jungyoun Park, Louis Charbonneau at the United Nations, and Arshad Mohammed in Washington; editing by Jonathan Thatcher and Eric Beech)