(Adds Mattis comments, China background, market reaction, experts)
* Trump says “fire and fury” remark maybe not tough enough
* He sidesteps question on launching pre-emptive attack
* Trump calls on China to do more to resolve crisis
By James Oliphant
BEDMINSTER, N.J., Aug 10 (Reuters) - President Donald Trump warned North Korea again on Thursday not to strike Guam or U.S. allies, saying his earlier threat to unleash “fire and fury” on Pyongyang if it launched an attack may not have been tough enough.
After North Korea disclosed plans to fire missiles over Japan to land near the U.S. Pacific territory of Guam, Trump said the move would prompt “an event the likes of which nobody’s seen before.”
He took specific aim at North Korean leader Kim Jong Un, saying he had “disrespected our country greatly. He has said things that are horrific. And with me, he’s not getting away with it,” Trump told reporters in New Jersey.
“It’s not a dare. It’s a statement,” Trump said. “He’s not going to go around threatening Guam. And he’s not going to threaten the United States. And he’s not going to threaten Japan. And he’s not going to threaten South Korea.”
North Korea’s army will complete the plans in mid-August to fire four intermediate-range missiles over Japan to land near Guam, when they will be ready for Kim’s order, state-run KCNA news agency said. The plans called for the missiles to land in the sea 30-40 km (18-25 miles) from Guam.
“Let’s see what he does with Guam. He does something in Guam, it will be an event the likes of which nobody’s seen before, what will happen in North Korea,” Trump said, without offering specifics.
Shortly after Trump spoke, U.S. Defense Secretary James Mattis told reporters in Mountain View, California, the United States still preferred a diplomatic approach to the North Korean threat and a war would be “catastrophic.”
Asked if the United States was ready if North Korea took a hostile act, he said: “We are ready.”
Tension in the region has risen since the reclusive communist country, which staged two nuclear bomb tests last year, launched two intercontinental ballistic missile tests in July in defiance of world powers. Trump has said he will not allow Pyongyang to develop a nuclear weapon capable of hitting the United States.
Far from toning down his words after saying on Tuesday that any threats by Pyongyang would be “met with fire and fury like the world has never seen,” Trump said those remarks may have not gone far enough. “Maybe it wasn’t tough enough,” Trump said.
Trump’s Tuesday comments unnerved allies in the region and drew criticism from some politicians and foreign policy experts at home as needlessly pugnacious at a time when more measured language would be appropriate.
On Thursday in Bedminster, New Jersey, where he is on a working vacation, Trump also declared the U.S. nuclear arsenal “in tip-top shape, and getting better, and getting stronger.”
Asked if he would consider a pre-emptive strike against North Korea to deny it the ability to launch a nuclear attack against the United States, Trump said, “We’ll see what happens.”
The United States and South Korea remain technically still at war with North Korea after the 1950-53 Korean conflict ended with a truce, not a peace treaty.
Trump also said new sanctions on North Korea approved by the U.N. Security Council on Aug. 5 that could slash by a third the country’s $3 billion annual export revenue probably would not be as effective as hoped.
He pressed China, North Korea’s most important ally and trading partner, to do more.
“I think China can do a lot more, yes. ... And I think China will do a lot more,” Trump said.
Trump has threatened to impose punitive trade restrictions on China for its alleged trade abuses, and has delayed actions to impose broad restrictions on steel imports. He also has shelved plans to investigate misappropriation of U.S. intellectual property by China after Beijing signed on to deeper U.N. sanctions against North Korea.
Trump said the United States loses a lot of money on trade with China. “It’s not going to continue like that. But if China helps us, I feel a lot differently toward trade,” Trump added.
The tensions between North Korea and the United States spurred a broad market sell-off in U.S. stocks. The benchmark S&P 500 stock index closed with a 1.4 percent loss, marking the biggest one-day drop since May and registering just the third day all year that it closed with a loss of more than 1 percent.
Wall Street’s fear index hit its highest level since Trump was elected, as investors snatched up insurance to protect against future stock market losses.
Former defense officials and experts say any new military conflict with North Korea would likely escalate quickly to the use of nuclear weapons, bringing catastrophic casualties not seen since World War Two and an untold economic impact worldwide.
They warned the escalating war of words could risk a miscalculation that could result in conflict far beyond the scale of the 1950-53 Korean War, which claimed the lives of millions of Koreans, tens of thousands of Chinese and Americans and thousands from U.S. allies like Britain.
Trump said the United States would “always consider negotiations” with Pyongyang, but faulted three of his predecessors, Barack Obama, George W. Bush and Bill Clinton, on their approach to North Korea.
Guam, a tropical island more than 3,000 km (2,000 miles) to the southeast of North Korea, is home to about 163,000 people. It has a strategically located U.S. air base, a Navy installation that includes a submarine squadron, a Coast Guard group and roughly 6,000 U.S. military service members.
“Sound dialogue is not possible with such a guy bereft of reason and only absolute force can work on him,” KCNA said, calling Trump’s “fire and fury” comment “a load of nonsense.”
Additional reporting by Tim Ahmann, Eric Beech, Matt Spetalnick, David Brunnstrom in Washington, Dustin Volz in California and Daniel Bases in New York; Writing by Will Dunham and John Whitesides; Editing by Alistair Bell and Andrew Hay