SEOUL, Aug 26: A nuclear test by North Korea cannot be ruled out if the United States steps up what Pyongyang calls its hostile policy towards the communist country, a pro-North Korea newspaper published in Japan said on Saturday.

The news comes amid reports that Pyongyang might be preparing a nuclear bomb test.

“We cannot say for sure there will be no nuclear test by North Korea to strengthen its self-defence, if the Bush administration steps up the hardline stance in military and other areas,” said an editorial in Chosun Sinbo, run by ethnic North Koreans living in Japan.

The editorial, posted on the newspaper’s Web site, said last month’s North Korean missile tests were also a response to Washington’s threats, notably financial sanctions targeting Pyongyang and joint military exercises with South Korea.

Pyongyang accused Washington on Saturday of escalating its financial sanctions on the North, and reiterated its long-standing refusal to resume negotiations on ending its nuclear weapons programmes until this stopped.

“The biggest obstacle that keeps us from joining the talks is the US financial sanctions,” the North Korean foreign ministry said in a statement carried by the official KCNA news agency.

Six-nation talks aimed at scrapping Pyongyang’s nuclear programmes broke down late last year over a US crackdown on firms Washington suspects of helping the North in counterfeiting and other illicit activities. North Korea denies any such activities.

A ministry spokesman said the Bush administration was now urging Vietnam and other Southeast Asian countries to stop all financial dealings with Pyongyang.

“In the meantime, it is tracing the accounts opened by the DPRK (North Korea) in banks of at least 10 countries, including some Southeast Asian countries and Mongolia and Russia ...

“All these facts go to clearly prove that the Bush administration is chiefly to blame for scuttling the six-party talks and straining the situation in the region and for putting the brake on the process to denuclearise the Korean peninsula,” the ministry spokesman said..

At six-way talks in Beijing last September, the North agreed to scrap its nuclear ambitions in exchange for economic aid, security assurance and greater diplomatic recognition.

Pyongyang declared in February last year that it possessed nuclear weapons. Japanese and US news reports have said the North might be preparing to conduct an underground nuclear test.

Last month, the communist state defied international warnings and test-fired seven missiles, prompting condemnation by the UN Security Council.—Reuters