North Korea confirms underground nuclear test

North Korea state media said the country's military conducted a successful underground nuclear test early Monday, confirming earlier reports of a suspected test based on seismic data.

The news triggered an emergency security meeting among South Korea officials and forced a temporary halt to trading on South Korea's main stock market.

News reports cited North Korea's state-run Korean Central News Agency as saying the nation had "successfully conducted another underground nuclear test on May 25 as part of its measures aimed at strengthening its self-defense nuclear deterrent in every way."

South Korean officials said earlier that it suspected a nuclear test had taken place after detecting an "artificial earthquake."

The U.S. Geological Survey reported an earthquake of magnitude of 4.7 on the Richter scale, centered about 230 miles northeast of Pyongyang. The epicenter is in the same area where North Korea conducted its previous nuclear test in October 2006.

Trading on the South Korean stock market was halted briefly after shares fell sharply in the wake of the news. Stocks recouped some of those earlier losses to trade 0.7% lower by Monday afternoon. Japan's Nikkei index was 1.2% higher at 9,335.18.

The move prompted negative reaction from the diplomatic community, with the United Nations Security Council expected to meet to discuss the event soon.

British junior foreign minister, Bill Rammell, called North Korea's announced nuclear test a "clear breach" of Security Council resolutions and urged it to return to disarmament talks, according to comments quoted by Agence France-Presse.

"We are gravely concerned by North Korea's claims," AFP quoted a U.S. State Department official as saying on condition of anonymity.
Political transition

"These are not ordinary times in North Korea," Uwe Parpart, a chief economist at Cantor Fitzgerald, said in comments Monday afternoon referring to a reported political change in the shadowy Pyongyang regime.

"Any political transition period in an absolute state is fraught with danger," he said. And "dangers in Korea range from military provocation all the way to chaotic Korean unification."

An article late Sunday in the Wall Street Journal said that U.S. President Barack Obama's administration has concluded that North Korean leader Kim John Il has begun a political transition, in which his brother-in-law and third son will be key players. See full WSJ.com story on North Korean transition.

Parpart said "investor caution is most advisable" and "Japan and Taiwan are fine alternatives for investment in North Asia while one waits for the smoke to clear."

North Korea's state media made the announcement around noon local time, or about two hours after South Korean officials detected the unusual seismic activity.

Pyongyang said in late April it would conduct more tests of nuclear devices and missiles.

South Korea's President Lee Myung-bak had called an emergency security meeting to assess the situation, Yonhap reported.