SEOUL – A North Korean ship tracked by the U.S. Navy on suspicion of carrying a banned arms cargo is expected to return home on Monday after a voyage that tested U.N. sanctions aimed at punishing Pyongyang for its May nuclear test.

The ship's return may decrease tensions that were raised after North Korea fired seven ballistic missiles on Saturday in an act of defiance toward the United States on its Independence Day.

The aging cargo ship Kang Nam, which set sail in mid June, was headed back to North Korea and is expected to arrive on Monday, South Korean Defense Ministry spokesman Won Tae-jae said.

Local dailies said it was headed for the North's port of Nampo after a journey that took it close to Myanmar.

A U.S. envoy coordinating the enforcement of U.N. sanctions on the North held talks in Malaysia with officials. South Korean dailies said the discussions focused on possibly shutting down bank accounts used by the North for suspected illicit deals.

The Obama administration has uncovered suspicious North Korean bank accounts in Malaysia, the Joongang Ilbo newspaper quoted a diplomatic source in Washington as saying.

A Malaysian official had described the visit by U.S. Ambassador Philip Goldberg as routine.

Foreign Minister Anifah Aman said: We are not going to act on every accusation that is being leveled at us because that would be virtually impossible but if they have evidence we will be most willing to work together to solve this problem.

Goldberg last week discussed enforcing sanctions with China, the North's biggest benefactor whose participation is essential for the punishment to take effect.

The U.N. sanctions imposed after the North's nuclear test were aimed at halting its arms trade, which is a vital source of foreign currency for the cash-short state. They also called on states to clamp down on the North's suspected arms shipments.

South Korea's stock market opened mostly flat on Monday, brushing off the barrage of missiles in a typical display of indifference to the North's military actions in recent years.

Stocks tend to react somewhat the first time around, but after a series of launches, tend to grow indifferent, said Lim Dong-min, a market analyst at KB Investment & Securities.

South Korea's main stock index has risen by 1.7 percent since the May 25 nuclear test but major military moves by the North can spark short-lived and sharp falls in stocks.


U.S. Vice President Joseph Biden dismissed North Korea's recent missile launches as predictable and said in a TV interview aired on Sunday it was part of attention-seeking behavior by the reclusive state.

Analysts said the missile test may be related to the U.N. sanctions because the North wants to show its customers, who face greater risks in purchasing missiles, that its products are reliable and accurate.

North Korea has been making profits through arms trading and this could also have been a test to measure their force, Dongguk University professor Koh Yu-hwan said. They want to test their performance on how much they have developed in the past months.

North Korea appears to have launched five Scud missiles, which could hit anywhere in South Korea, and two mid-range Rodong missiles, that could strike most of Japan, in the salvo fired on Saturday, South Korean officials told reporters.

The missiles flew as far as 420 km (260 miles) and displayed greater precision than previously shown, one official said.

Defense Ministry spokesman Won said the North had greatly improved the accuracy of its missiles.

A senior South Korean official quoted by the Dong-A Ilbo daily said: They showed the North is capable of dealing a serious blow to military command centers, airfields and major government installations throughout the South.

The level of threat is of an entirely different scale when compared to previous launches of surface-to-ship and surface-to-air missiles.

The Scud and Rodong are ballistic missiles. Their launch would mark an escalation by the North, which has fired several non-ballistic, short-range missile since the May 25 nuclear test.

North Korea is barred by U.N. resolutions from firing ballistic missiles. It has more than 600 Scud type missiles and 300 Rodong missiles which have been deployed and target U.S. allies South Korea and Japan, defense officials have said.

(Additonal reporting by Christine Kim in Seoul and Razak Ahmad in Kuala Lumpur; Editing by Jon Herskovitz and David Fox)