North Korea "will legitimately counter with [its] powerful nuclear deterrence the largest-ever nuclear war exercises to be staged by the U.S. and the South Korean puppet forces," the state-run KCNA news agency said.

Earlier, the isolated communist nation vowed a "physical response" to massive U.S.-South Korean military drills set to begin Sunday. The U.S. Defense Department said the drills are in response to the sinking of the South Korean warship Cheonan and are intended to send a strong message to Pyongyang to stop "provocative and warlike acts."

At a regional security conference Friday, North Korea lashed out at the impending exercise."There will be a physical response against the threat imposed by the United States militarily," North Korea spokesman Ri Tong Il said outside the Association of Southeast Asian Nations meeting in Hanoi, Vietnam.

Two U.S. military officials told there was no sign of significant troop movement in North Korea.

Why are the two Koreas so hostile?

About 8,000 military personnel from the United States and South Korea are scheduled to participate in the joint military exercises.

Meanwhile Friday, in the demilitarized zone between the two Koreas, officers from the North sat down for talks about the Cheonan incident with their counterparts in the U.S.-led United Nations Command.

During the almost two-hour meeting in the international truce town of Panmunjom, the U.N. Command reminded the North Koreans of the Security Council's condemnation this month of the Cheonan attack.

The Security Council did not mention North Korea by name but condemned the attack strongly, called for "full adherence" to the armistice agreement that halted fighting in the Korean War in 1953 and encouraged "the settlement of outstanding issues on the Korean peninsula by peaceful means."

An international inquiry found North Korea culpable for the March attack that killed 46 South Korean sailors. But North Korea denies a role in the incident, which elevated tension between the two enemies.

North Korea demanded again Friday that it be allowed to conduct its own investigation of the Cheonan's sinking and said the upcoming war games are being conducted under false pretext.

"The U.S. forces side would be seriously mistaken if it calculates it can browbeat [North Korea] through large-scale war exercises," the state-run KCNA news agency said. "It should immediately stop the [anti-North Korean] nuclear war racket."

"[This] double-dealing attitude is a dangerous one of driving the situation on the Korean Peninsula to a war phase," KCNA said.

At the ASEAN meeting, nation after nation expressed deep regrets and offered condolences to the South Koreans. The United States has accused North Korea of aggressive behavior and imposed new sanctions Wednesday.

Secretary of State Hillary Clinton reiterated U.S. support for South Korea on Friday.

"Here in Asia, an isolated and belligerent North Korea has embarked on a campaign of provocative, dangerous behavior," she said in Hanoi, Vietnam.

Later, after a repatriation ceremony for the remains of three soldiers who died in the Vietnam War, Clinton said the door remains open for dialogue if North Korea commits to abandoning its nuclear weapons program.

"We would love for them to have the same opportunities that the people of South Korea have been able to enjoy for the last 60 years," Clinton said. "So, it is distressing when North Korea continues its threats and causes so much anxiety among its neighbors and the larger region."

Ri described the planned U.S.-South Korea joint military exercise as "another example of a hostile policy" against North Korea.

"It is a grave threat to the Korean peninsula and also to the region of Asia as a whole," he said.

He said the exercise is a threat to North Korea's sovereignty and security.

The military exercise, dubbed Invincible Spirit, is scheduled to run from Sunday through Wednesday. In addition to the 8,000 personnel involved, military officials say, it will include 20 ships and submarines and about 200 aircraft.

The exercises are to take place in the Sea of Japan on South Korea's east coast and the Yellow Sea on the west coast, according to a joint U.S. and South Korean statement.

China has objected to war games in the Yellow Sea, so close to its coastline. And that is what bothers North Korea as well, said a University of Georgia professor who returned two weeks ago from his 52nd trip to Pyongyang.

"I think it's a bad idea," said Han Park, who helped arrange former President Carter's visit to North Korea in 1994 and is the only American to have visited the rogue nation since the Cheonan incident.

Park said the United States should never underestimate the resolve of the North Korean military, one that is further emboldened now by Chinese opposition to the military drills.

"I will hold my breath if this takes place anywhere near the west coast," he said.