Tensions heighten as North Korea test-fires missiles

North Korea fired two surface-to-ship missiles off its east coast that flew about 100 km (60 miles) and splashed into the sea, a South Korean defense official said. A South Korean daily said that the secretive North may also test fire mid-range missiles in a matter of days.

Washington said this week it had tightened its crackdown on firms linked to the North's lucrative proliferation of missiles, a major source of cash for the destitute state, and has sent the US point man for sanctions to Asia for discussions.

North Korea was hit with UN sanctions following its May 25 nuclear test. Analysts said enforcement of the sanctions, aimed at halting its trade in arms, would depend heavily on China, the North's biggest benefactor and trade partner. China said on Thursday it was sending its envoy to six-country talks aimed at ending the North's atomic ambitions to South Korea, Japan, Russia and the United States. North Korea, the final party in the talks, is not on the itinerary.

"China has consistently advocated dialogue and consultation, and achieving denuclearization of the Korean peninsula through the six-party talks process," Foreign Ministry spokesman Qin Gang told a news briefing.

Koreas fail to reach agreement on factory park dispute

Meanwhile, the two Koreas held talks about fees paid at a joint factory project in the North that is a major source of legitimate foreign currency for the cash-short communist state and the last major project between the rival states.

North Korea repeated its demand for a sharp increase in wages and lease fees at Kaesong park, where South Korean companies use cheap North Korean labor and land to make goods, a South Korean Unification Ministry spokesman said. About 100 South Korean companies pay $70 a month per person to employ about 40,000 North Koreans.

Analysts said North Korea was trying to squeeze more money out of the South Korean companies in Kaesong as UN sanctions imposed for its missile and nuclear tests begin to grip the state that produces few goods other than arms it can export.

The North said in May it was canceling all wage, rent and tax agreements for the park, once hailed as a model of future economic cooperation between the rival states technically still at war who share one of the world's most militarized borders.