SEOUL : North Korea said on Friday that it has reached the final stage of enriching uranium, a second way of making nuclear bombs, in a defiant response to tougher United Nations sanctions.

The hardline communist state also announced it was building more plutonium-based atomic weapons.

"Experimental uranium enrichment has successfully been conducted to enter into completion phase," the official Korean Central News Agency quoted its permanent representative to the United Nations as saying.

"Reprocessing of spent fuel rods is at its final phase and extracted plutonium is being weaponised," the representative said in a letter to the UN Security Council president.

The North, which had recently struck a more conciliatory note after months of tension, said it was prepared "for both dialogue and sanctions."

Some analysts said its nuclear claims appeared aimed at pressing Washington to open direct talks.

Pyongyang for years denied US allegations of a secret enriched uranium bomb-making programme, in addition to the admitted plutonium-based operation which fuelled two nuclear tests.

But on June 13, a day after the UN punished Pyongyang's latest test with tighter sanctions, the North vowed to start an enriched uranium programme and to extract more plutonium from spent fuel rods at its Yongbyon reactor.

South Korea's foreign ministry said Friday's announcement was "intolerable" and said it will "deal sternly and consistently with North Korea's threats and provocations."

Experts believe the North has enough plutonium for possibly six to eight bombs. A full-scale enriched uranium programme is seen as a distant prospect, but troubling because it could be hidden from spy satellites.

South Korea's then-defence minister said in June such a programme could be housed in a space as small as 600 square metres (6,500 square feet).

Kim Yeon-Chul, of Seoul's Hankyoreh Peace Research Institute, said it was difficult to assess how far uranium enrichment technology had progressed, although it was not surprising that fuel rods were being processed.

"Keeping open windows both for dialogue and a further nuclear build-up, North Korea is warning the US that its nuclear activities will only move forward unless negotiations get under way," Kim told AFP.

The North's UN representative said he was responding to a letter from the world body's sanctions committee "requesting a clarification."

The United Arab Emirates has told the committee it seized a ship carrying North Korean weapons to Iran.

The North said it would never be bound by Resolution 1874 passed June 12. If some Security Council members continued to put sanctions before dialogue, it would be forced "to take yet stronger self-defensive countermeasures."

Pyongyang had shut down Yongbyon under a six-nation nuclear disarmament deal. After the UN censured its April 5 long-range rocket launch it quit those talks and vowed to restart its bomb-making programme.

The North staged its second nuclear test on May 25.

The North said it had never objected to denuclearising the Korean peninsula but the six-way talks had been used to "violate outrageously" its sovereignty.

"We are open to bilateral engagement as well, but only within the context of the six-party process and as an effort to rejuvenate and restart the six-party process," US special envoy for North Korea, Stephen Bosworth, said in Beijing.

He arrived in Seoul later Friday and will fly on to Tokyo for talks on ways to restart the six-party process.

"Anything that the North is doing in the area of nuclear development is a concern to us," Bosworth said.

Japan's incoming government vowed to maintain a tough stance.

"We will respond with stern sanctions" against Pyongyang's missile and nuclear activities, said Democratic Party of Japan secretary general Katsuya Okada, who is expected to take a key cabinet post.

As the US pressed for tough enforcement of sanctions, the North made a peace overtures.

In August it freed two US journalists and five South Koreans, eased border crossings with the South and sent representatives to talks in Seoul.

But the latest news saw about 150 activists burn portraits of the North's leader Kim Jong-Il in the South Korean capital.