South Korea vows to take measures to stabilize financial markets

South Koreans lack a sense of looming crisis

In an ideal scenario, Acton said, the two sides would agree that North Korea could not carry out missile tests that overfly South Korea or Japan - which would preclude them getting anywhere near Guam - in exchange for the U.S. ending strategic bomber training flights within an agreed distance of the North.

He said dialogue could start but that North Korea should first halt "nuclear and missile provocations".

But the atmosphere is likely to worsen again next week when the United States and South Korea kick off their annual Ulchi Freedom Guardian military drills.

China, North Korea's largest trading partner, has vowed to enforce the new sanctions, as it has done with previous imposts, and says it is ready to pay the price.

Moon also urged the North to come to the dialogue table, saying sanctions against Pyongyang aim only draw it out to talks.

Tillerson says: "We continue to be interested in trying to find a way to get to dialogue but that's up to him".

But the USA and South Korea are set to begin their annual 10-day Ulchi Freedom Guardian joint exercises on Monday, involving tens of thousands of troops, which the North has long slammed as a rehearsal for invasion. It did not identify which media.

Another American, college student Otto Warmbier, was released in June in a coma and died shortly after his arrival in the United States. China gives a lifeline to North Korea despite global criticism not because it favors North Korea or treasures the blood brotherhood, as many mistakenly believe.

"The most important task at hand is for the USA and North Korea to "hit the brakes" on their mutual needling of each other with words and actions, to lower the temperature of the tense situation and prevent the emergence of an 'August crisis, '" Wang was quoted as saying in the Tuesday conversation.

He added that there is no change in Guam's threat assessment, and that the island is operating as usual.

"What matters is that if a second conflict (on the peninsula) erupts, that can not help but lead to a nuclear war", the North's official Korean Central News Agency said in a commentary.

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"This is a very important time for security in the region and of course we are mostly focussed on the threat coming out of North Korea", Dunford said.

In an effort to jumpstart diplomacy, South Korean President Moon Jae-in said Thursday he would consider sending a special envoy to North Korea for talks if the North stops its missile and nuclear tests.

Moon in a speech Tuesday also said resolving the North Korean threat could begin with freezing its nuclear weapons program.

Kim Jong Un's government has always denounced the joint exercises as a provocative ruse created to hide a US invasion. Both Koreas and the United States have signalled in recent days, however, a willingness to avert a deepening crisis, with each suggesting a path toward negotiations.

Payne also showed her support for Washington's new policy on North Korea, the Strategic Accountability - a measure proposed by US State Secretary Rex Tillerson and Defence Secretary Jim Mattis seeking to pressure North Korea into the denuclearisation of the peninsula.

The call came as China urged the USA and North Korea to "hit the brakes" on the threatening rhetoric that has seen both countries threaten each other with military action in recent weeks, and prevent an "August crisis" on the peninsula. But its comments appeared to signal a path to defuse the crisis by saying Kim would watch US conduct before giving his orders. But his efforts have been met with a string of threats and missile tests as the North works to build nuclear-armed missiles that can reach the US mainland.

North Korea this week has detailed its plan to test-launch ballistic missiles into waters near the U.S. Pacific territory.

"The urgent task is to slam the brakes on the mutually provocative words and actions between North Korea and the United States", the Chinese statement said.

USA and South Korean military forces are gearing up to start joint large-scale air, land and sea maneuvers Monday in South Korea. But the South Korean government said Dunford did tell Moon that the United States is preparing military options in the event that diplomatic pressure fails.

General Fang Fenghui, chief of the People's Liberation Army's Joint Staff Department, holds a welcoming ceremony for his US counterpart, Marine Corps General Joseph Dunford, chairman of the US Joint Chiefs of Staff, in Beijing on Tuesday.

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