North Korea on Friday threatened the United States and South Korea with a "physical response" to planned weekend naval exercises as tensions with the communist nation rose in the aftermath of the sinking of a South Korean warship blamed on the North. In Vietnam for a Southeast Asian regional security forum, Secretary of State Hillary Clinton and a North Korean official traded barbs over the ship incident, the upcoming military drills and the imposition of new U.S. sanctions against the North.

The exercises will be "another expression of hostile policy against" North Korea. "There will be physical response against the threat imposed by the United States militarily," Ri told reporters in Hanoi.

Shortly before he spoke, Clinton had lashed out against belligerent acts by the North, warning that it must reverse a "campaign of provocative, dangerous behavior" if it wants improved relations with its neighbors and the United States.

 sanctions on the North to stifle its nuclear ambitions and punish it for the sinking of the South Korean ship. The penalties will target the country's elite by taking aim at illicit activities, such as counterfeiting cigarettes and cash and money laundering.

Numerous reports in past months have suggested that Myanmar's military rulers are attempting to develop nuclear weapons with North Korean help.

Her comments are likely to anger China, which asserts sovereignty over the whole South China Sea, but Clinton said the U.S. did not support any country's sovereignty over the islands. She said the U.S. is willing to work with the all the parties, including Vietnam, Taiwan, Malaysia, Brunei, and the Philippines, to help negotiate an end to the disputes.