North Korea yesterday severed all ties with South Korea, hitting back at Seoul, which has reduced cross-border trade to punish Pyongyang for sinking a warship in March.
Mounting tensions on the peninsula are hitting the currency and stock markets of Asia's fourth-biggest economy, with reports that Kim Jong-il, the North Korean dictator, had put his million-man army at battle stations.
Seoul has accused Mr Kim of ordering a submarine to torpedo a South Korean warship on March 26, killing 46 sailors. North Korea denies the charge.
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