North Korea warns of nuclear 'sacred war'

North Korea has said it would begin a "sacred war" against the United States and South Korea at "any time necessary", based on its nuclear deterrent, in response to "reckless" military exercises by the allies.

The North's powerful National Defence Commission again denied in a statement that the country was behind the sinking of a South Korean warship and said it could be forced to retaliate against the two countries, which begin large-scale military drills on Sunday.

"The army and people of the DPRK will start a retaliatory sacred war of their own style based on nuclear deterrent any time necessary in order to counter the U.S. imperialists and the South Korean puppet forces deliberately pushing the situation to the brink of a war," the commission said.

The statement was part of a verbal onslaught by the North after a South Korea-led team of investigators concluded in May that a North Korean submarine had torpedoed a South Korean warship in March, killing 46 sailors.

The North escaped rebuke by the U.N. Security Council, which condemned the attack in a statement early in July without directly blaming the Pyongyang government.

The United States has rejected a call by the North to resume six-party nuclear talks and announced new sanctions on Wednesday to freeze the North's assets and cut off the flow of cash to the destitute state's leaders.

At a multilateral Asian forum in Vietnam this week, the North threatened a physical response to planned large-scale U.S. and South Korean military exercises in the waters off the Korean peninsula.