North Korea today threatened a "physical response" to planned military exercises by the US and South Korea this weekend, as tensions on the Korean peninsula dominated a regional security forum in Hanoi.

The regime did not specify what that response might be, but said it interpreted the launch on Sunday of four days of naval and air drills in the Sea of Japan as another sign of US "hostility".

"It is a threat to the Korean peninsula and the region of Asia as a whole," a North Korea spokesman, Ri Tong-il, told reporters at the Asean regional forum.

Ri said the drills harked back to 19th-century gunboat diplomacy and violated North Korea's sovereignty. "And [our] position is clear: there will be physical response to the threat imposed by the United States militarily," he said.

Operation Invincible Spirit will involve 8,000 US and South Korean troops, 200 aircraft and 20 ships, including the nuclear-powered aircraft carrier the USS George Washington.

The meeting in Hanoi has quickly become the stage for a war of words between the north and the US, although there has been no direct contact between the countries' delegates.

The US secretary of state, Hillary Clinton, said "isolated and belligerent" North Korea would have to end its "campaign of provocative, dangerous behaviour" if it wanted better relations with the US and the rest of Asia.

North Korea has pulled out of six-party talks on its nuclear programme and is blamed for the March sinking of the Cheonan, a South Korean navy vessel, in which 46 sailors died.

The regime denies carrying out the attack and has unleashed a wave of belligerent rhetoric in response to what it calls US aggression.

On Wednesday, Clinton unveiled new sanctions designed to deny luxury goods to North Korean elites and strangle funding for Pyongyang's nuclear programme. The north says it will not return to nuclear negotiations unless the sanctions are lifted.

Today, Clinton urged Asian nations to pressure North Korea into abandoning its nuclear ambitions by enforcing strict UN sanctions imposed after the regime's second nuclear test last year.

"One measure of the strength of a community of nations is how it responds to threats to its members, neighbours and region," Clinton said.

A South Korean newspaper said the new US sanctions would target 200 North Korean-held foreign bank accounts thought to be connected with illegal activities such as nuclear weapons development, drug trafficking and counterfeiting.

"Even before the Cheonan incident, the US was tracking around 200 North Korean bank accounts in banks in China, Russia and even eastern Europe and Africa that are believed to be involved in the development of weapons of mass destruction and the export of drugs, counterfeit money, fake cigarettes and weapons," the Chosun Ilbo newspaper quoted a diplomatic source as saying.

The paper said the North Korean leader, Kim Jong-il, is believed to hold a US$4bn slush fund in secret accounts in Switzerland, Luxembourg and Liechtenstein.

North Korea also rejected South Korean demands to apologise for the sinking of the Cheonan.

"We cannot accept such a claim because they try to use it to shift (their) responsibility on to us," Ri said. He repeated North Korea's position that the cause of the sinking remains unclear and insisted that it be allowed to conduct a joint investigation with the south.

"South Korean authorities bear the responsibility for causing tension ... South Korea is the one who must apologise," he said.

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