North Korea says preparing rocket launch

By Jon Herskovitz

SEOUL (Reuters) - North Korea said on Tuesday it was preparing to launch a satellite on one of its rockets, which analysts have said would actually be the test-firing of a long-range missile designed to strike U.S. territory.

The announcement, which unsettled financial markets in South Korea, follows weeks of angry rhetoric from Pyongyang aimed at the conservative government in Seoul and warnings that the Korean peninsula was on the verge of war.

Analysts said Pyongyang was using brinkmanship to put pressure on the new U.S. government and its main allies in the region, South Korea and Japan, to reverse tough policies against the North. Secretary of State Hillary Clinton, on a trip to Asia last week, warned North Korea against any provocative moves.

"The preparations for launching an experimental communications satellite ... are now making brisk headway," North Korea's KCNA news agency said.

"When this satellite launch proves successful, the nation's space science and technology will make another giant stride forward in building an economic power."

Officials in Seoul, Tokyo and Beijing said they were closely watching developments in the North while security experts were divided on whether the launch could take place in days or weeks.

North Korea stunned the region when it fired a missile over Japan in 1998, saying it had launched a satellite.

If the long-range rocket flies successfully, Pyongyang would have a missile with a maximum range of 6,700 km (4,200 miles), designed to eventually carry a nuclear warhead that could hit U.S. territory, but not the contiguous 48 states, analysts said.