SEOUL - North Korea said Saturday it would start a uranium enrichment program and weaponize all its plutonium in response to fresh U.N. sanctions, prompting the United States to demand that Pyongyang stop its provocative actions.

North Korea also threatened military action if the United States and its allies tried to isolate it.

The U.N. Security Council approved a resolution Friday which banned all weapons exports from North Korea and most arms imports into the state. It authorized U.N. member states to inspect North Korean sea, air and land cargo, requiring them to seize and destroy goods shipped that violate the sanctions.

In Washington, a U.S. State Department official said, (North Korea) needs to cease provocative actions and rhetoric, and return unconditionally to the six-party process. The six-party nuclear disarmament talks involve the two Koreas, the United States, Russia, Japan and China.

In Lecce, Italy, finance ministers of the Group of Eight wealthy countries said they were committed to the effective and timely implementation of financial measures against North Korea as set out in the Security Council resolution.

KCNA news agency quoted an unnamed North Korean Foreign Ministry spokesman as saying in a statement, We'll take firm military action if the United States and its allies try to isolate us.

He also said North Korea would start a program to enrich uranium for a light-water reactor. Experts said North Korea does not have the technology or the resources to build one of the costly reactors but may use the program as cover to enrich uranium for weapons.

The spokesman added that North Korea would weaponize all plutonium and we've reprocessed more than one-third of our spent nuclear fuel rods.

SQUEEZE CONCESSIONS

Impoverished North Korea for years has used its military threat to squeeze concessions out of regional powers willing to pay Pyongyang for taking steps that decrease regional risks.

North Korea responded to U.N. punishment for an April rocket launch, widely seen as a disguised long-range missile test, by saying it had restarted its plant that separates plutonium from spent fuel rods and threatening to test fire an intercontinental ballistic missile.

North Korea's Soviet-era Yongbyon nuclear plant was being taken apart under a now-stalled disarmament-for-aid deal among Pyongyang and five regional powers. The spent fuel rods cooling at Yongbyon can produce up to one more bomb's worth of fissile material, experts said.

The United States has long suspected North Korea, which has ample supplies of natural uranium, of having a program to enrich uranium for weapons, which would give it a second path towards producing atomic weapons.

Studies have shown that U.N. sanctions imposed on North Korea for missile testing and its only prior nuclear test in 2006 had almost no impact, while its meagre trade actually increased due to lax enforcement of those measures.

The success of financial sanctions depends heavily on how far China and the United States are willing to go to pressure North Korea, said Jeong Hyung-gon, a research fellow at the Korea Institute for International Economic Policy.

The isolated country's $2 billion annual trade with neighbouring China, equal to about 10 percent of North Korea's annual GDP, is its most important economic relationship. Beijing has wanted to avoid any measures that could cause North Korea's economy to collapse and lead to chaos on its border.

Two senior diplomats negotiating the resolution told Reuters on condition of anonymity that the Chinese had never really clarified whether they intended to implement the new sanctions resolution.

China's U.N. ambassador, Zhang Yesui, said the resolution showed the firm opposition of the international community to North Korea's nuclear ambitions, but he urged countries to exercise caution when inspecting North Korean cargo.

North Korea has raised tension in the region in the past months by test-firing missiles, restarting a plant to produce arms-grade plutonium and holding the May 25 nuclear test, which put it closer to having a working nuclear bomb.

(Additional reporting by Jonathan Thatcher in Seoul and Louis Charbonneau, Claudia Parsons at the United Nations and Sue Pleming in Washington; Editing by Will Dunham)

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