North Korea issues warning ahead of U.S.-South Korea summit

SEOUL, South Korea North Korea on Tuesday threatened the United States and South Korea over joint naval drills taking place this week in tense Yellow Sea waters ahead of a Washington summit by the allies' leaders.

The warning, however, was softer than North Korea's recent highly bellicose rhetoric, and followed the North's removal of two missiles from a launch site where they had been readied for possible test firing, U.S. officials said.

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In the highly conditional threat, the section of the Korean People's Army responsible for operations in North Korea's southwest said it would hit back if any shells fall in its territory during the drills, which began Monday and are to end Friday. Should the allies respond to that, it said the North Korean military will strike five South Korean islands along the aquatic frontline between the countries.

The area includes waters that are claimed by both countries, and is the most likely scene of any future clash between the rival Koreas. North Korea disputes a boundary unilaterally drawn close to its shores by the U.S.-led U.N. Command after the war, and has had three bloody naval clashes with the South since 1999.

Highly critical language is standard from North Korea during what the allies call routine military drills that they stage over the course of a year. Tuesday's statement was less bellicose than the rhetoric Pyongyang regularly unleashed during two months of larger-scale joint military drills by the allies that ended one week ago. That included threats of nuclear and missile strikes on Washington and Seoul.

The warning also came after the North took a step back from its recent escalation of tensions by removing two medium-range missiles from a launch site in eastern North Korea where they had been in launch-ready status, two U.S. officials said Tuesday. The officials spoke on condition of anonymity because they were not authorized to publicly discuss a matter involving sensitive U.S. intelligence. It wasn't immediately clear why the missiles were removed.

Still, the new warning came at a time of tentative diplomatic maneuvering on the divided Korean Peninsula, which is still technically in a state of war because the three-year Korean War ended 60 years ago with an armistice, not a peace treaty.

The threat also came hours ahead of a summit by President Barack Obama and South Korea's new president, Park Geun-hye. They hoped to present a strong front against North Korea during their meeting Tuesday at the White House, while also leaving the door open to talks with Pyongyang.

In an interview with CBS News' Margaret Brennan, Park said that she is holding to her principle and will not reward North Korea's bad behavior. In the past, North Korea's threats to attack were met with offers for negotiations and the exchange of aid for an agreement to halt its nuclear development.

Park said that this time she "didn't play their game." She pointed to her decision to withdraw all of South Korean workers from a jointly-administered industrial complex, known as Kaesong, as evidence that she would not back down. She said that the world must make clear to North Korea that "they have no choice but to change." That may be interpreted as a nod toward trying to further isolate North Korea through financial sanctions. She agrees with the U.S. that China can be of "enormous assistance" in influencing North Korea and said Beijing is "actively implementing" sanctions. Park will travel to China in June.

There are concerns that any skirmish or shelling between the Koreas could escalate into war. Two attacks blamed on Pyongyang in 2010 killed 50 South Koreans, and Park has repeatedly said Seoul would respond aggressively to another attack from the North.

If Pyongyang conducts an attack similar to the 2010 shelling of an island that killed four South Koreans, "We will make them pay," Park told CBS News' Brennanin an interview aired Monday.

Inter-Korean relations are particularly strained amid North Korean anger over U.S.-South Korean military drills and U.N. sanctions in March that sought to punish the North over its February nuclear test, the country's third.

Last week, South Korea pulled out its last remaining citizens from a joint factory park in North Korea after Pyongyang earlier withdrew all of its 53,000 workers. The park is the last symbol of inter-Korean rapprochement and an important source of hard currency for the North.

North Korea suffered another financial blow Tuesday when one of China's biggest banks said it has halted business with a North Korean bank accused by the U.S. of financing Pyongyang's missile and nuclear programs, in the latest sign of Beijing's displeasure with its estranged ally.

The state-run Bank of China Ltd. has notified the Foreign Trade Bank of North Korea that its account or accounts were being closed and all financial transactions suspended, said a bank spokeswoman, reading a brief statement. She did not provide further details.

The move comes after China's leadership has shown growing frustration with North Korea's young leader Kim Jong Un and the nuclear and missile tests his government has conducted, aggravating regional tensions. China is North Korea's economic lifeline, providing nearly all of its fuel and most of its trade.

Despite the allies' claims that the military drills are routine, Pyongyang calls them a preparation for invasion and is especially sensitive to the inclusion of any U.S. nuclear-capable assets. Washington in March responded to rising tensions on the Korean Peninsula by making the unusual announcements that it had sent nuclear capable B-52 and B-2 bombers to participate in the drills, prompting a harsh North Korean rhetorical response.

Nuclear-powered U.S. carriers routinely come to South Korea around this time of year as part of drills aimed at enhancing naval cooperation, South Korean Defense Ministry spokesman Kim Min-seok said Monday in a briefing. But Seoul wouldn't discuss whether any U.S. nuclear-capable assets were participating in this week's drills, and U.S. military officials declined to comment on operations.

On Tuesday, Kim denied North Korea's claim that South Korea's military this week conducted live-fire artillery drills near the disputed Yellow Sea waters.