VIDEO: N. Korea, Trying To Jolt Obama, Warns South

North Korea said on Friday it was scrapping all accords with the South, the latest verbal onslaught against its neighbour that analysts say is more aimed at grabbing the attention of new U.S. President Barack Obama.

Analysts said the latest rise in tension increased the chances of a military clash on the strongly defended border that has divided the two Koreas for more than half a century.

"There is neither way to improve (relations) nor hope to bring them on track," North Korea's KCNA news agency quoted the Committee for the Peaceful Reunification of Korea as saying.

"The confrontation between the north and the south in the political and military fields has been put to such extremes that the inter-Korean relations have reached the brink of a war."

KCNA also launched a fresh attack on South Korean President Lee Myung-bak, accusing him of putting as a new minister in charge of relations on the peninsula one of the architects of the government's "undisguised policy for confrontation with the DPRK (North Korea)".

The North in recent months has repeatedly warned of war on the divided peninsula and threatened to destroy the conservative government in Seoul which has ended a decade of free-flowing aid to Pyongyang after taking office a year ago.

South Korea's presidential Blue House stuck to its policy of largely ignoring the rhetoric flying across one of the world's most heavily armed borders where over a million troops face off.

"Our position is there is no need to react sensitively or get happy or sad over every single statement issued with some political motive (by the North)," a presidential official said.

Reaction in financial markets was equally sanguine.

"Market participants are sick and tired of the North's rah rah ... investors remain pretty much unmoved now," said Y.S. Rhoo, an analyst at Hyundai Securities.

Major ratings agencies said they saw no reason to adjust their view on South Korea following the threats.

"Unless things develop to the point where there is a real threat to security or stability on the Korean peninsula, we are unlikely to change our assessment of the South Korean government's creditworthiness as a result of this declaration," Kim Eng Tan, a sovereign ratings official at Standard & Poor's, said.

Some government officials admit privately they worry that a sharp escalation in tension could add pressure on an economy just as the global downturn drags it towards recession.

The cancelled agreements do not include the armistice at the end of the 1950-53 Korean War, signed by the United States, North Korea and China, but not the South. Technically, the war is not over because there is still no peace accord.

SEEKING OBAMA'S ATTENTION

Some analysts say the sabre-rattling is more aimed at jolting newly inaugurated Obama into taking notice of Pyongyang which has for years used the threat of nuclear weapons to extract concessions from Washington, in particular diplomatic relations and an end to its global isolation.

North Korea had hinted in a New Year message it was willing to work with Obama -- who has suggested he is open to talks.

International talks to end its nuclear programme have been stuck and Pyongyang has in the past gone beyond rhetoric to make a point. It exploded its first nuclear device in 2006 when it appeared to be increasingly left out in the cold by Washington.

The latest move follows comments by a U.S. national security official that the secretive state's leader, Kim Jong-il, appeared to have rebounded politically from his recent health scare and is making major decisions.

Masao Okonogi, a Korea expert at Keio University in Tokyo, said the North hoped that by cutting ties with the South and Japan, it could more quickly push itself onto Obama's agenda.

"North Korea is just sending a message to the United States.

"If relations with the United States break down completely, there might be the possibility of military tension. But for now they want the United States to talk to them and any military action will just worsen the situation. It's just words for now."

Korea University professor Yoo Ho-yeol said the latest challenge had three aims: to pressure South Korean President Lee Myung-bak to soften his policy, scare the United States and to drum up political support at home.

"The North probably believes that this type of thing is the most effective way of getting the upper hand with the U.S. ahead of negotiations by raising tension," Yoo said.

In recent months, it has all but closed the few border links with the South that were open, though a lucrative industrial park operated by Seoul just inside its border has remained open.

But Pyongyang may be exhausting its rhetorical options.

"What is worrying is that the possibility of a military clash is rising," Yoo said, pointing to the possibility of broader confrontation than naval skirmishes in 1999 and 2002.

Added Bruce Klingner, a North Korea analyst at the conservative Heritage Foundation think tank in Washington:

"North Korea's escalating threats do not indicate major hostilities are imminent. However, they could easily presage another round of tactical naval confrontations with South Korea in the West Sea."

Take a look at the VIDEO: Obama blamed for Korean split