SEOUL - North Korea, defiant in the face of international condemnation of its latest nuclear test, fired two more short-range missiles off its east coast on Tuesday and accused the United States of plotting against its government.

In a move certain to compound tensions in the region, South Korea said it would join a U.S.-led initiative to intercept ships suspected of carrying weapons of mass destruction, something Pyongyang has warned it would consider a declaration of war.

South Korea's Yonhap news agency quoted a government source in Seoul as saying the North had test-fired one surface-to-air and one surface-to-ship missile off its east coast. The missiles had a range of about 130 km (80 miles).

North Korea could also launch by Wednesday more short-range missiles, perhaps toward a disputed sea border with the South, South Korean media quoted government sources as saying.

North Korea fired off three short-range missiles on Monday.

The nuclear test on Monday, the North's second after one in 2006, drew sharp rebuke from regional powers, and U.S. President Barack Obama called Pyongyang's nuclear arms program a threat to international security.

The demonstrations of military might have also taken a toll on Seoul's jittery financial markets, worried about the impact of North Korea's growing belligerence in a region which accounts for a sixth of the global economy.

Underlining concerns over how far the North might be prepared to raise the stakes, Obama assured South Korean President Lee Myung-bak of Washington's unequivocal commitment to defense on the long-divided peninsula, where some two million troops face off.

There is little more Washington can do to deter the ostracized North, punished for years by international sanctions and so poor it relies on aid to feed its 23 million people.

Analysts say the latest military grandstanding is also aimed at bolstering leader Kim Jong-il's steel grip on power at home so he can better engineer his succession -- with many speculating he wants his third son to take over.

The nuclear test is also bound to raise concerns about proliferation, a major worry of the United States which has in the past accused Pyongyang of trying try to sell its nuclear know-how to states such as Syria. Some analysts say it also has close military ties with Iran.

The DPRK's nuclear test not only poses a serious threat to peace and stability on the Korean peninsula, and southeast Asia and beyond, but also represents a grave challenge to the international non-proliferation regime, South Korean disarmament ambassador Im Han-tauck told the U.N.-sponsored Conference on Disarmament in Geneva.

SECURITY COUNCIL CONDEMNATION

The U.N. Security Council condemned the nuclear test and is working on a new resolution.

Interfax news agency in Moscow quoted a Russian Foreign Ministry source as saying the adoption of a tough resolution was probably unavoidable because the Security Council's authority was at stake.

But analysts say North Korea's giant neighbor China, one of five permanent members of the Council, is unlikely to support anything tough.

For China, the more immediate risk may be serious rupture inside the impoverished state, which could spark a flood of North Korean refugees across its border.

Beijing is also believed to want to bring Pyongyang back to long-running talks with regional powers to make it give up its nuclear weapons programme in return for massive aid and an end to its years as a pariah state.

However, analysts say North Korea, which now spurns those talks, wants to use its nuclear muscle as leverage in its dealings with Washington.

Brushing aside the latest international condemnation, Pyongyang said the United States was the aggressive one, its long-held argument to justify having a nuclear arsenal.

SEOUL STOCKS, CURRENCY FALL

South Korean stocks and the won currency wobbled for a second day, with the main KOSPI share index ending the day more than 2 percent lower, while the won fell almost 1 percent against the dollar, although many traders said the market was becoming less concerned by North Korea.

While sentiment was certainly weighed down by growing North Korea tension, we think its impact would be relatively short-lived, said So Jang-ho, a market analyst at Samsung Securities.

A number of analysts said 67-year-old leader Kim, who is widely thought to have suffered a stroke last year, hopes his defiant weapons tests will help him secure support from the hard-line military for his chosen successor.

Kim was named successor by his father and the country's founding president Kim Il-sung, but has carefully avoided putting any of his three sons in the limelight.

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