North Korea has said it is entering a "state of war" with South Korea, threatening to shut down a jointly-run border factory symbolic of their fragile détente, said the Associated Press.
The move is the latest escalation of rhetoric from the North against its neighbor and the US, with Pyongyang promising "stern physical actions" against "any provocative act," but the South brushed off the North's comments as an attempt to act tough.
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"From this time on, the North-South relations will be entering the state of war and all issues raised between the North and the South will be handled accordingly," a statement carried by the North's official KCNA news agency said, according to Reuters.
The statement went on to say North Korea would deal with all matters involving South Korea according to "wartime regulations."
The statement also said that if the US and the South planned a pre-emptive attack, the conflict "will not be limited to a local war, but develop into an all-out war, a nuclear war."
Hours later, the North threatened to close a prominent North-South project known as the Kaesong industrial park.
"If the puppet group seeks to tarnish the image of the DPRK even a bit, while speaking of the zone whose operation has been barely maintained, we will shut down the zone without mercy," authorities with the North said in comments carried by KCNA, reported AP.
North Korea has been threatening attacks since it was sanctioned for a third nuclear test in February. According to a South Korean defense ministry official, there was no sign of unusual activity in the North's military to suggest any upcoming aggression.
Reaction from the US has been cautious.
"North Korea is not going to war," a senior US official told CBS News, indicating the Obama administration thinks the North Korean's rhetoric is more bluff than bite.
The two Koreas have technically been in a state of war since 1953 when they entered a truce that ended their three-year war.
Here's a video from AP on the latest developments: