North Korea starts fuelling rocket

Saber RATTLING

Traders in Seoul, used to North Korean saber rattling, mostly shrugged off the latest development, but analysts said any attempt to shoot down the rocket would increase the chances of conflict in North Asia, which accounts for one-sixth of the global economy.

"Market participants have learned over time to remain calm to North Korea-related developments," said Lee Kyoung-su, a market analyst at Taurus Investment & Securities.

The launch poses a major risk for the cash-strapped North. A failure would deal a blow to missile sales, one of its few successful export businesses, and embarrass North Korean leader Kim Jong-il, 67, whose suspected stroke in August raised questions about his steely grip on power over Asia's only communist dynasty.

A successful launch, coming just ahead of the annual meeting of North's parliament next week, would put to rest any questions about Kim's power and could help him pave the way for succession, analysts said.

"The North Korean people need this. If you have a military first regime (like North Korea's), it has to been seen as doing something. You are going to need these spectacular displays of North Korean defiance of the outside world," said Brian Myers, a professor at South Korea's Dongseo University and a specialist in the North's state ideology.

Several missile-interceptor ships with sophisticated radar from Japan, the United States and South Korea are expected to be in waters along the rocket's flight path over Japan but there are no plans to intercept it unless it threatens their territories.

U.S. spy satellites constantly monitor the launch site in the northeast corner of North Korea. Weather for the area is expected to be partially cloudy from Saturday.

(Additional reporting by Kim Junghyun, Park Jung-youn, Yoo Choonsik and Seo Eun-kyung in Seoul and Caren Bohan in London, Editing by Dean Yates, Jonathan Hopfner and Sanjeev Miglani)