The weapons in North Korea's arsenal

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Members of the Japanese parliament and Germany's Chancellor Angela Merkel have also demanded tougher UN sanctions on North Korea. Kang told parliament that her nation is working with the US for the "strongest" measures against North Korea.

Experts and diplomats agree that sanctions have a limited impact and are only one tool in the broader international effort to persuade North Korea to change its behavior.

North Korea conducted the military drill as "an exercise of restraint and justified self-defense right" to counter "the ever-growing and decade-long US nuclear threat and hostile policy aimed at isolating my country", Han said, the wire service reported.

"But it will depend on whether small- and mid-cap issues will be able to regain steam", and no external factors will shake the market, Otsuka added.

At the same time, Liu cautioned against any military option.

US gold futures for December delivery were up 0.8% at $1,341.30.

While arguing for diplomacy over escalating tensions, the Chinese ambassador to the United Nations said China would "never allow chaos and war" on the Korean peninsula.

U.S. Defense Secretary Jim Mattis, repeated the warnings of President Donald Trump on Sunday.

It comes a day after the South's military simulated a missile attack on the North's nuclear test site. This includes Iran. Confronting Kim Jong-un militarily could lead to millions of casualties.

The Nikkei 225 average lost 122.44 points, or 0.63 percent, to close at 19,385.81.

Mr Gomez said the US probably knew where the big nuclear enrichment and missile factories were located but the missile units themselves may be harder to locate.

It is well within range of North Korea's missiles - with both of its latest intercontinental ballistic missiles (ICBM) capable of hitting the territory.

However, it does not want to see the North Korean regime swept away.

China accounts for the vast majority of North Korean exports and imports.

Analysis from Norsar, a Norweigan geoscience research foundation, suggests that the explosion created by Sunday's test is far greater than that seen in North Korea's last alleged H-Bomb test, which took place in September 2016. On Saturday, Pyongyang's state-run media outlet released exclusive images of leader Kim Jong-Un standing next to what appeared to be a two-stage thermonuclear weapon. Kim likely has something like this in mind.

"We are considering powerful punitive measures including the adoption of a new Security Council resolution", the report said. He wants the U.S.to halt joint military maneuvers with the South, recognize his regime, tear up the security pact with Seoul, and get our forces off the peninsula.

Already involved in land disputes with a nuclear-armed Russia and India, China's dominance of Asia - should Japan and South Korea acquire nuclear weapons - begins to diminish.

In June 2009 the ban was extended to all military material, financial transactions and technical training related to the supply and use of arms, nuclear and missile technology.

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