North Korea threatens to cut ties with South: report

SEOUL (Reuters) - North Korea has threatened to end all relations with South Korea, a major supplier of aid and cash, in anger at the hardline policies of its president, Yonhap news agency reported on Thursday, quoting North Korean media.

The move comes days after North Korea said it would resume taking apart its nuclear plant that makes bomb-grade plutonium and return to a disarmament-for-aid deal.

"We will have no choice but to make an important resolution including ending all relations with the South (if Lee continues a confrontational policy,)" the North's communist party newspaper said in a commentary, referring to South Korean President Lee Myung-bak.

Ties between the two states technically still at war turned frosty after Lee took office in February and angered Pyongyang by saying he would cut what had once been a free flow of aid and instead ties Seoul's handouts to progress Pyongyang makes in getting rid of its nuclear arms program.

Isolated North Korea, which insults Lee on a regular basis in its official media, stands to see better chances for trade and international commerce due to the compromise it reached last weekend in the nuclear deal with China, Japan, Russia, South Korea and the United States.

The Lee government has asked North Korea to hold bilateral talks and resume humanitarian projects such as reunions for the thousands of families separated after the 1950-1953 Korean War.

(Reporting by Kim Yeon-hee and Jon Herskovitz; Editing by Valerie Lee)