By Susan Heavey and Jack Kim
WASHINGTON/SEOUL (Reuters) – President Donald Trump warned on Tuesday that all options are on the table for the United States to respond to North Korea’s firing of a ballistic missile over northern Japan’s Hokkaido island into the sea in a new show of force.
The missile test further increased tension in east Asia as U.S. and South Korean forces conducted annual military exercises on the Korean peninsula, angering Pyongyang which sees the war games as a preparation for invasion.
North Korea has conducted dozens of ballistic missile tests under its leader, Kim Jong Un, in defiance of U.N. sanctions, but firing projectiles over mainland Japan is rare.
Trump, who has vowed not to let North Korea develop nuclear missiles that can hit the mainland United States, said the world had received North Korea’s latest message “loud and clear”.
“Threatening and destabilizing actions only increase the North Korean regime’s isolation in the region and among all nations of the world. All options are on the table,” Trump said in a statement.
Trump and Japanese Prime Minister Shinzo Abe spoke and agreed that North Korea “poses a grave and growing direct threat” to the United States, Japan and South Korea, the White House said.
Investors flocked to safe-haven assets after the missile firing.
The dollar fell to its lowest in more than 2-1/2 years against a basket of major currencies <.DXY> but then rebounded, while benchmark 10-year U.S. Treasury note yields fell and the price of gold hit more than a nine-month peak. U.S. stocks <.SPX> recovered from a sharply lower open.
Initial assessment indicates the North Korean missile was an intermediate-range ballistic missile (IRBM), the Pentagon said in a statement. Two U.S. officials said it appeared to be a KN-17, or Hwasong-12.
North Korea’s Kim guided a launch of its Hwasong-12 intermediate-range ballistic missile on Tuesday in a drill to counter the joint exercises by South Korean and U.S. militaries, the North’s official KCNA news agency said on Wednesday.
“The current ballistic rocket launching drill like a real war is the first step of the military operation of the KPA in the Pacific and a meaningful prelude to containing Guam,” KCNA quoted Kim as saying.
Pentagon spokesman Colonel Robert Manning said diplomacy was still Washington’s preferred option with Pyongyang.
North Korea was defiant.
“The U.S. should know that it can neither browbeat the DPRK with any economic sanctions and military…