The threat came as South Korea dispatched another top diplomat to Washington Tuesday to seek a peaceful solution to the standoff over the North's nuclear program. 

A day earlier, the U.N. nuclear watchdog gave North Korea a second chance to abandon its suspected weapons program _ delaying possible U.N. sanctions. 

"Sanctions mean a war, and the war knows no mercy," said the North's official Korean Central News Agency on Tuesday. 

In Pyongyang, more than 100,000 people bundled in dark overcoats and caps attended a state-orchestrated rally on Tuesday in support of a strong military. They vowed to "consider the military affairs as the most important state affair, exert utmost efforts to increase the national defense capacity," KCNA said. 

Standing on a snow-covered plaza in neat rows, the demonstrators shook their clenched fists against the backdrop of white-and-red communist slogans, according to KCNA photographs carried by South Korea's Yonhap news agency. 

Aside from the possibility of U.N. sanctions, U.S. officials have considered encouraging North Korea's neighbors to reduce economic ties with Pyongyang if the situation does not improve. 

China, North Korea's last major ally, appealed Tuesday for a negotiated settlement, but a Foreign Ministry spokeswoman wouldn't say whether Beijing is willing to intervene with the isolated nation. 

"We hope to see a settlement of the issue through dialogue," said ministry spokeswoman Zhang Qiyue. Asked several times at a news briefing about what China would do to encourage the North to seek such a settlement, she would say only that Beijing "maintains contact with all sides." 

In its message Tuesday, North Korea criticized the United States for portraying it as an international missile threat and retorted: "The U.S. tops the world's list in producing and selling the weapons of mass destruction." 

It also demanded Washington apologize for last month's seizure buy U.S. and Spanish warships in the Arabian Sea of a North Korean ship carrying Scud missiles to Yemen. The cargo ship was later allowed to sail after Yemen promised the missiles would not be transferred elsewhere in the Persian Gulf region. 

The North's sharp comments came as South Korean envoys upped efforts to persuade the United States to open dialogue with the communist state. 

Washington assured envoys from Seoul and Tokyo on Monday that the United States would work closely with them to ease the crisis. 

"We have no intention of invading North Korea," President Bush told reporters in the White House. 

Hours earlier, the International Atomic Energy Agency approved a resolution demanding the North abandon its weapons program and readmit inspectors it expelled last month. The IAEA refrained from immediately turning to the U.N. Security Council right away, but the agency's chief Mohamed ElBaradei warned it would do so if the North does not comply. 

Referring the issue to the Security Council is a last resort for the IAEA and could lead to punitive sanctions or other actions against North Korea's regime. 

The South Korean government welcomed the decision on Tuesday, saying in a Foreign Ministry statement that it offered North Korea a "precious chance" to resolve the issue "diplomatically and peacefully." 

Meanwhile, South Korean media reported that a possible compromise plan, being floated by Seoul, would require North Korea to abandon its uranium-based nuclear program and the United States to resume fuel oil shipments suspended in December. 

If the United States resumes the shipments, North Korea would have no justification for reactivating its second, plutonium-based nuclear program, according to reports. 

Verifying North Korea compliance, however, is still a hurdle. 

Separately, the government said that South Korea's last shipment of rice aid to North Korea would leave port Jan. 14. An agreement to provide food aid, which began last September, had been set to expire before the current nuclear dispute erupted. 

Extending more aid would require additional talks. 

Later this week, U.S. Assistant Secretary of State James Kelly is to travel to Seoul. 

The North alarmed the world in October by admitting to a U.S. envoy that it had a secret uranium-based nuclear weapons program, in violation of a 1994 accord. 

As punishment, the United States and its allies halted oil supplies promised in the agreement. North Korea then announced it would reactivate its older plutonium-based nuclear program, saying it needs to restart a reactor to generate electricity. 

The United States says the plutonium-based program could be used to build nuclear weapons. Washington has also indicated North Korea may already have two nuclear weapons and can build several more in short order.