SEOUL (Reuters) — North Korea threatened on Monday to retaliate with "extreme" measures if the United Nation punished it for last month's nuclear test, with Washington saying it may put Pyongyang back on its list of states that sponsor terrorism.

US Secretary of State Hillary Clinton said earlier North Korea's recent activities were being scrutinized for evidence of "support for international terrorism," a designation that could subject the impoverished state to more financial sanctions.

The UN Security Council may adopt a new resolution as early as this week, but there is clear division among some members over how tough the measures against the reclusive state should be.

"Our response would be to consider sanctions against us as a declaration of war and answer it with extreme hard-line measures," the North Korea's official Rodong Sinmun newspaper said in a commentary.

An increasingly aggressive North indicated it was gearing up for fresh moves, issuing a no-sail warning off its east coast up to 260 kilometers off the Wonsan area from where it launched a missile in May and a barrage of short-range missiles in 2006.

Underscoring the divide in how to handle Pyongyang, Japanese Foreign Minister Hirofumi Nakasone called for a strong resolution to make it clear that such tests would not be forgiven, while Chinese counterpart Yang Jiechi at a meeting in Tokyo said a ''balanced'' resolution was needed.

The US removed North Korea from its terrorism blacklist in October in a bid to revive faltering six-party nuclear disarmament talks, prompting the North to take some measures to disable its nuclear facilities.

Pyongyang has since reversed those steps and said it had restarted the nuclear complex – including reprocessing nuclear fuel to obtain weapons-grade plutonium.

Many analysts believe the North's belligerence may be largely aimed at a domestic audience with autocratic leader Kim Jong-il using it to bolster his position at home with the military and to better secure the succession for his youngest son Kim Jong-un.