SEOUL - Relatives of two U.S. journalists sentenced to 12 years hard labor in North Korea called on the reclusive state to show compassion, while Pyongyang threatened to use nuclear weapons to defend itself.

Monday's sentence by a top North Korean court has deepened a chill with Washington and comes as global powers look to punish Pyongyang for a nuclear test in May that put it closer to having a working atomic bomb.

Analysts say Pyongyang is using the journalists as bargaining chips to gain the upper hand with Washington, which for years has tried to use sweeteners in return for Pyongyang reducing the security threat it poses to the North Asia region, responsible for one-sixth of the world's economy.

We ask the government of North Korea to show compassion and grant Laura and Euna clemency and allow them to return home to their families, relatives of Laura Ling and Euna Lee, of U.S. media outlet Current TV, said in a statement.

The two, both in their 30s, were arrested in March near the border China-North Korea border working on a story for the company, co-founded by former U.S. Vice President Al Gore.

The North convicted them of grave crimes, saying they illegally entered the country but details of their arrest, including where they were taken into custody, are still sketchy.

Relatives have appeared on U.S. television shows to appeal for support and rallies have been held in major U.S. cities.

The hermit North maintains a network of prisons where inmates are overworked and underfed and brutality is the norm, human rights groups and defectors have said.

In Washington, White House spokesman Robert Gibbs said the journalists' fate should not be linked to the dispute over Pyongyang's nuclear program.

If they (North Korea's leaders) wanted them for any other purposes, they would have made a big deal of it in domestic media, said B.R. Myers, an expert on the North's state ideology at Dongseo University in South Korea. The fact that they have not gives me hope that a resolution can be reached.

MERCILESS OFFENSIVE

Markets have largely shrugged of the North's actions, and analysts say it would take a military clash at sea or on the border to have a major impact on global markets.

In a sign of growing tension with Seoul, a South Korean fur coat maker has become the first firm to pull out of a joint industrial complex in North Korea that was once a symbol of economic cooperation but has now turned into a point of conflict between the rival states.

North Korea appears ready to further ratchet up tensions by preparing for tests of a long-range missile that could reach U.S. territory and mid-range missiles capable of striking anywhere in South Korea and in most of Japan, officials have said.

A major North Korean newspaper said on Tuesday the country maintains a nuclear deterrent to maintain peace in the region, while warning: it will be a means of merciless offensive of just retaliatory attack to those who damage our pride and sovereignty.

Experts said the North may have enough fissile material for up to eight bombs but has not shown that it has developed a working nuclear weapon. It is also likely several years away from miniaturizing an atomic weapon to mount on a warhead.

Analysts said the military grandstanding may be primarily aimed at the internal audience to help leader Kim Jong-il, who is believed to have suffered a stroke last year, arrange for eventual succession in Asia's only communist dynasty for his youngest son, Swiss-educated Jong-un.

Adding to the mystery of a change of leadership in one of the world's most secretive states, Kim's sister Kim Kyong-hui made a rare public appearance when the North's state media reported this week that she went to the opera with her brother.

The last time state media said she appeared in public was about six years ago, the South's Unification Ministry said. Kim's oldest son Jong-nam has told Japanese broadcasters this week from his home in Macau that his father favors Jong-un and that is why he may be the next leader.

The U.N. Security Council may adopt a new resolution as early as this week to clamp down on the country's arms trade and finances, but members are divided on how to respond.

China, the North's biggest benefactor, is wary of moves that might push its fragile neighbor into collapse fearing this could destabilize the region and cause a flood of refugees.

China will support strong sanctions, but not extreme ones, said Qin Yaqing, Vice President of China Foreign Affairs University in Beijing and an adviser to senior leaders on regional affairs, in an interview with Reuters.

(Additional reporting by Jack Kim and Kim Junghyun in Seoul, Chris Buckley in Beijing, Louis Charbonneau at the United Nations and Caren Bohan in Washington; Editing by Jeremy Laurence)

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