South Korea knocks down rumor North leader dead

North Korean leader Kim Jong-il (L) inspects the Daedonggang general fruit farm, which was newly built by the People's Security Department (the National Police Agency), near Pyongyang, in this picture released by North Korea's official KCNA news agency November 30, 2009. KCNA did not state expressly the date when the picture was taken.

SEOUL (Reuters) - South Korea's Unification Ministry dismissed rumors Tuesday that North Korean leader Kim Jong-il had been attacked and killed, which prompted financial markets to slide briefly in what one analyst said was a reflection of fragile sentiment.

"That's the first I've heard of this," ministry spokesman Chun Hae-sung said when asked about rumors Kim was dead. "I haven't heard anything about it."

Kim is suspected to have suffered a stroke in August last year and was out of the public eye for months before re-emerging looking gaunt and markedly thinner.

His illness bred speculation that one of his sons was being groomed to take over power in the reclusive communist state. South Korean officials have said Kim has recovered and is conducting normal state activities with a firm grip on power.

North Korea's official media have reported him on field guidance tours throughout the country in recent months.

"There were rumors that Kim Jong-il was dead, sent around by some unreliable reports, but I have to say this is nonsense," said Lee Sun-yeop, a market analyst at Shinhan Investment Corporation. "However the fact that markets reacted, albeit briefly, implies that sentiment is fragile."

(Reporting by Jack Kim and Jungyoun Park; Editing by Jonathan Hopfner and Bill Tarrant)