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The BBC's Lucy Williamson: "North Korea and America are in a kind of 'who blinks first' game"
North Korea has said it is entering a "state of war" with South Korea in the latest escalation of rhetoric against its neighbour and the US.
A statement promised "stern physical actions" against "any provocative act".
North Korea has threatened attacks almost daily since it was sanctioned for a third nuclear test in February.
However, few think the North would risk full-blown conflict. It has technically been at war with the South since 1953 as no peace treaty has been signed.
An armistice at the end of the Korean War was never turned into a full treaty.
'Taking threats seriously'The North carried out its third nuclear test on 12 February, which led to the imposition of fresh sanctions.
Analysis
Over the past few weeks, there's been an ever-growing war of words between the two sides, and this latest statement in particular has made the Koreas' neighbours nervous.
Tensions have built quickly since the UN Security Council imposed fresh sanctions on North Korea. The fact that Pyongyang's only major ally, China, backed the sanctions - and even helped to frame them - has left the North's regime feeling more isolated than ever. Some believe its current hardline rhetoric is in part to send a warning to Beijing not to antagonise it.
Most analysts believe that Pyongyang is unlikely to start a full-blown war with South Korea or its key ally, the US, but that other kinds of provocations are much more likely. And with South Korea promising a strong response to any action by the North, many fear that a minor - or even accidental - incident could quickly escalate.
The annual US-South Korean military exercises have also taken place, angering Pyongyang further.
A North Korean statement released on Saturday said: "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.
"The long-standing situation of the Korean peninsula being neither at peace nor at war is finally over."
In Washington, Caitlin Hayden, a spokeswoman for the National Security Council, said the US had "seen reports of a new and unconstructive statement from North Korea".
"We take these threats seriously and remain in close contact with our South Korean allies," she said.
North Korea has made multiple threats against both the US and South Korea in recent weeks, including warning of a "pre-emptive nuclear strike" on the US and the scrapping of the Korean War armistice.
On Thursday, North Korean state media reported leader Kim Jong-un "judged the time has come to settle accounts with the US imperialists".
He was said to have condemned US B-2 bomber sorties over South Korea during military exercises as a "reckless phase" that represented an "ultimatum that they will ignite a nuclear war at any cost on the Korean peninsula".
US mainland and bases in Hawaii, Guam and South Korea were all named as potential targets.
State media in the North showed thousands of soldiers and students at a mass rally in Pyongyang supporting Kim Jong-un's announcement.
North Korea's most advanced missiles are thought to be able to reach Alaska, but not the rest of the US mainland.
On Wednesday, Pyongyang cut a military hotline with the South - the last direct official link between the two nations.
Timeline: Korean tensions
- 12 Dec: North Korea fires three-stage rocket, in move condemned by UN as banned test of long-range missile technology
- 12 Feb: North Korea conducts an underground nuclear test, its third after tests in 2006 and 2009
- 7 Mar: UN approves fresh sanctions on Pyongyang; North Korea says it has the right to a "pre-emptive nuclear strike" on the US
- 11 Mar: US-South Korea annual joint military drills begin; North Korea says it has scrapped the Korean War armistice (the UN says the pact cannot be unilaterally scrapped)
- 19 Mar: US flies B-2 nuclear-capable bombers over Korean peninsula, following several North Korean threats to attack US and South Korean targets
- 20 Mar: Broadcasters and banks in South Korea hit by cyber attack, the origin of which remains unknown, days after North Korea says some of its sites were hacked
- 27 Mar: North Korea cuts military hotline with South, the last official direct link between the two
- 28 Mar: US flies stealth bombers over Korean peninsula; showcasing ability for precision strike "at will"
- 30 Mar: North Korea says it is entering a "state of war" with South Korea
A Red Cross hotline and another line used to communicate with the UN Command at Panmunjom have already been cut, although an inter-Korean air-traffic hotline still exists.
The jointly run Kaesong industrial park, just north of the border, is still in operation. However on Saturday, Pyongyang's official KCNA news agency said it would be closed if insults to the North's "dignity" continued.
On 16 March, North Korea warned of attacks against South Korea's border islands, and advised residents to leave the islands. In 2010, it shelled South Korea's Yeonpyeong island, causing four deaths.
'Maximum restraint'White House spokesman Josh Earnest said the latest rhetoric only deepened North Korea's isolation.
China, North Korea's biggest trading partner, has reiterated its call for all sides to ease tensions.
Foreign ministry spokesman Hong Lei told a daily news conference that "joint efforts" should be made to turn around a "tense situation".
On Saturday, Russian foreign ministry spokesman Grigory Logvinov told the Interfax news agency: "We expect all sides to show maximum responsibility and restraint and that no-one will cross the line after which there will be no return."
He said: "Naturally, we cannot remain indifferent when an escalation of tensions is taking place at our eastern frontiers. We cannot but worry."
One South Korean resident, Lee Gae-hwa, told Reuters news agency she felt "very scared", adding: "I hope we can find a good solution since we're from the same nation."
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