North Korea demanded Thursday that South Korea apologise for what it called insults during major anniversary festivities, or face a "sacred war", as Seoul unveiled a new missile to deter its neighbour.
Regional tensions have risen since Pyongyang went ahead with a long-range rocket launch last Friday, defying international calls to desist.
The event was to have been a centrepiece of celebrations marking the 100th anniversary Sunday of the "Day of the Sun", the birthday of Kim Il-Sung who founded the communist nation and the dynasty which still rules it.
But the rocket, which the North said was designed to launch a satellite, disintegrated after some two minutes of flight.
"The puppet regime of traitors must apologise immediately for their grave crime of smearing our Day of Sun festivities," said a government statement on Pyongyang's official news agency.
Otherwise, it said, the North Korean people and military "will release their volcanic anger and stage a sacred war of retaliation to wipe out traitors on this land".
The North has several times demanded that the South apologise for perceived slights or face war since its longtime leader Kim Jong-Il died in December. Under his son and new leader Kim Jong-Un, it has struck a hostile tone with the South.
South Korea announced Thursday it has deployed new cruise missiles capable of destroying targets such as missile and nuclear bases anywhere in the North.
"With such capabilities, our military will sternly and thoroughly punish reckless provocations by North Korea while maintaining our firm readiness," Major General Shin Won-Sik told reporters.
Yonhap news agency said the new cruise missile could travel more than 1,000 kilometres (625 miles).
Cross-border tensions have been high since conservative President Lee Myung-Bak took office in Seoul in 2008 and scrapped a near-unconditional aid policy.
"If our power is strong, we can deter enemy provocations," Lee said Thursday, describing the North as "the world's most hostile force".
The North hit back at critical comments by Lee and by conservative media, which questioned the overall cost of the celebrations in a nation suffering acute food shortages.
Lee had said the estimated $850 million cost of the launch could have bought 2.5 million tons of corn.
"Traitor Lee Myung-Bak took the lead in vituperation during the festivities," said a joint statement by the North's government, party and social groups.
"This is an intolerable insult to our leader, system and people and a hideous provocation that sparked seething anger among the whole people."
The North said its only aim was to launch a peaceful satellite, but the United States and its allies said this was a flimsy excuse for a test by the nuclear-armed nation of ballistic missile technology.
On Monday the United Nations Security Council including Pyongyang's ally China strongly condemned the launch. Washington said it also breached a bilateral deal and suspended plans for food aid.
The North has warned of unspecified retaliation. Some experts believe it will conduct a new nuclear test or further long-range missile tests, while others predict a border clash with the South.
An unrepentant Pyongyang last Sunday displayed an apparently new medium-range missile at a parade featuring thousands of goose-stepping troops and almost 900 pieces of weaponry.
A leading defence journal said Thursday that UN officials are investigating whether China supplied technology for its launcher vehicle, in a possible breach of UN sanctions.
IHS Jane's Defence Weekly quoted a senior official close to a United Nations Security Council sanctions committee as saying that an associated panel of experts was "aware of the situation and will pursue enquiries".
IHS Janes's reported earlier that China appeared to have supplied either the design or the actual vehicle to the North.
It said the 16-wheel transporter-erector-launcher (TEL) is apparently based on a design from the 9th Academy of the China Aerospace Science and Industry Corporation.
China said it had actively abided by UN resolutions while practising "strict export control of proliferation materials".
"China is always against the proliferation of weapons of mass destruction and the carrier equipment for such weapons," foreign ministry spokesman Liu Weimin said in Beijing.