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* North Korea walks away from Feb 29 agreement with U.S.

* Pyongyang should refrain from nuclear test under UN

resolutions- Washington

* Third nuclear test more likely

By Ju-min Park

SEOUL, April 18 (Reuters) – A bristling North Korea on

Wednesday said it was ready to retaliate in the face of

international condemnation over its failed rocket launch,

increasing the likelihood the hermit state will push ahead with

a third nuclear test.

The North also ditched an agreement to allow back

inspectors from the International Atomic Energy Agency. That

followed a U.S. decision, in response to the rocket launch it

says was a disguised long-range missile test, to break off a

deal earlier this year to provide the impoverished state with

food aid.

Pyongyang called the U.S. move a hostile act and said it was

no longer bound by its Feb. 29 agreement with Washington,

dashing any hopes that new leader Kim Jong-un would soften a

foreign policy that has for years been based on the threat of an

atomic arsenal to leverage concessions out of regional powers.

“We have thus become able to take necessary retaliatory

measures, free from the agreement,” the official KCNA news

agency said, without specifying what actions it might take.

Many analysts expect that with its third test, North Korea

will for the first time try a nuclear device using highly

enriched uranium, something it was long suspected of developing

but which it only publicly admitted to about two years ago.

“If it conducts a nuclear test, it will be uranium rather

than plutonium because North Korea would want to use the test as

a big global advertisement for its newer, bigger nuclear

capabilities,” said Baek Seung-joo of the Seoul-based Korea

Institute for Defense Analysis.

Defence experts say that by successfully enriching uranium,

to make bombs of the type dropped on Hiroshima nearly 70 years

ago, the North would be able to significantly build it up stocks

of weapons-grade nuclear material.

It would also allow it more easily to manufacture a nuclear

warhead to mount on a long range missile.

The latest international outcry against Pyongyang followed

last week’s rocket launch, which the United States and others

said was in reality the test of a long range missile with the

potential to reach the U.S. mainland.

North Korea has insisted that the rocket launch, which in a

rare public admission it said failed, was meant to put a

satellite into orbit as part of celebrations to mark the 100th

birthday of President Kim Il-sung, whose family has ruled the

autocratic state since it was founded after World War Two.

The peninsula has been divided ever since with the two

Koreas yet to sign a formal peace treaty to end the 1950-53

Korean War.

SATELLITE IMAGES

Recent satellite images have showed that the North has

pushed ahead with work at a facility where it conducted previous

nuclear tests.

While the nuclear tests have successfully alarmed its

neighbours, including major ally China, they also showcase the

North’s technological skills which helps impress a hardline

military at home and buyers of North Korean weapons, one of its

few viable exports.

The North has long argued that in the face of a hostile

United States, which has military bases in South Korea and

Japan, it needs a nuclear arsenal to defend itself.

“The new young leadership of North Korea has a very stark

choice; they need to take a hard look at their polices, stop the

provocative action,” U.S. Secretary of State Hillary

Clinton said at a news conference in Brazil’s capital.

NEW FACE, SAME TUNE

The Swiss-educated Kim Jong-un, who is in his late 20s,

rose to power after his father’s death last December. The

country’s propaganda machine has since made much of his physical

likeness to his revered grandfather, the first leader and now

North Korea’s “eternal president”.

But hopes that the young Kim could prove to be a reformer

have faded fast. In his first public speech on Sunday, the

chubby leader made clear that he would stick to the pro-military

policies of his father that helped push the country into a

devastating famine in the 1990s.

Kim is surrounded by the same coterie of generals that

advised his father and he oversaw Sunday’s mass military parade.

He urged his people and 1.2 million strong armed forces to

“move forward to final victory” as he lauded his grandfather’s

and father’s achievements in building the country’s military.

Siegfried Hecker, a U.S. nuclear expert who in 2010 saw a

uranium enrichment facility in North Korea, believes the state

has 24-42 kg (53 to 95 pounds) of plutonium, enough for four to

eight bombs.

Production of plutonium at its Yongbyon reprocessing plant

has been halted since 2009 and producing highly enriched uranium

would simultaneously allow Pyongyang to push ahead with its

nuclear power programme and augment its small plutonium stocks

that could be used for weapons, Hecker says.

“I believe North Korean scientists and engineers have been

working to design miniaturised warheads for years, but they will

need to test to demonstrate that the design works: no nuclear

test, no confidence,” Hecker said in a paper last week.

“Unlike the claim that Pyongyang can make that its space

launch is purely for civilian purposes, there is no such

civilian cover for a nuclear test. It is purely for military

reasons.”

(Additional reporting by Choonsik Yoo and Jack Kim; Editing by

Jonathan Thatcher)