North Korea nuclear test "possible" in new year

The report came a day after Pyongyang vowed a nuclear "sacred war," using its nuclear deterrent, after the South vowed to be "merciless" if attacked again and held a major military drill near the border.

The North, which carried out nuclear tests in 2006 and 2009, has yet to show it has a deliverable weapon as part of its plutonium arms program, but a third test would raise tensions further on the divided peninsula and rattle global markets.

South Korean media reported earlier this month that the North was digging a tunnel in preparation for a nuclear test.

"There is a possibility of North Korea carrying out its third nuclear test to seek improvement in its nuclear weapons production capability, keep the military tension high and promote Kim Jong-un's status as the next leader," the report said, referring to ailing Kim Jong-il's youngest son.