By Christine Kim and Steve Holland
SEOUL/NEW YORK (Reuters) - North Korea said on Friday it might test a hydrogen bomb over the Pacific Ocean after U.S. President Donald Trump vowed to destroy the reclusive country, with leader Kim Jong Un promising to make a "mentally deranged" Trump pay dearly for his threats.
Kim did not specify what action he would take against the United States or Trump, with whom he has traded insults over recent weeks. South Korea said it was the first direct statement of its kind by a North Korean leader.
However, Kim's foreign minister, Ri Yong Ho, said in televised remarks North Korea could consider a hydrogen bomb test of an unprecedented scale on the Pacific Ocean.
Ri, who was talking to reporters in New York ahead of a planned address later this week, also said he did not know Kim's exact thoughts.
Japan, the only country ever to suffer an atomic attack, described the threat as "totally unacceptable".
Trump said in his first address to the United Nations on Tuesday he would "totally destroy" North Korea, a country of 26 million people, if it threatened the United States and its allies, and called Kim a "rocket man" on a suicide mission.
Kim said the North would consider the "highest level of hard-line countermeasure in history" against the United States and that Trump's comments had confirmed his own nuclear program was "the correct path".
Pyongyang conducted its sixth and largest nuclear test on Sept. 3 and has launched dozens of missiles this year as it accelerates a program aimed at enabling it to target the United States with a nuclear-tipped missile.
"I will surely and definitely tame the mentally deranged U.S. dotard with fire," Kim said in the statement carried by the KCNA state news agency.
"SLEEPWALKING INTO WAR"
In a separate report, KCNA made a rare criticism of official Chinese media, saying their comments on the North's nuclear program had damaged ties and suggested Beijing, its only major ally, had sided with Washington.
Singling out the official People's Daily and its more nationalistic sister publication, the Global Times, KCNA said Chinese media was "openly resorting to interference in the internal affairs of another country" and driving a wedge between the two countries.
The escalating rhetoric came even as U.N. Secretary-General Antonio Guterres called for statesmanship to avoid "sleepwalking" into a war.
South Korea, Russia and China all urged calm.
However, the rhetoric was starting to rattle some in the international community. French Sports Minister Laura Flessel said France's team would not travel to the 2018 Winter Olympic Games in South Korea if its security cannot be guaranteed.
The 2018 Games are to be staged in Pyeongchang, just 80 km (50 miles) from the demilitarized zone between North and South Korea, the world's most heavily armed border.
Asian stocks fell and the Japanese yen and Swiss franc gained on the possibility of a hydrogen bomb test in the Pacific. [MKTS/GLOB]
MSCI's broadest index of Asia-Pacific shares outside Japan handed back earlier gains and was down 0.4 percent.
In his sanctions announcement on Thursday, Trump stopped short of going after Pyongyang's biggest trading partner, China, praising as "tremendous" a move by its central bank ordering Chinese banks to stop doing business with North Korea.
The additional sanctions on Pyongyang, including on its shipping and trade networks, showed that Trump was giving more time for economic pressures to weigh on North Korea after warning about the possibility of military action on Tuesday.
Asked ahead of a lunch meeting with the leaders of Japan and South Korea on Thursday if diplomacy was still possible, Trump nodded and said: "Why not?"
Trump said the new executive order on sanctions gives further authorities to target individual companies and institutions that finance and facilitate trade with North Korea.
It "will cut off sources of revenue that fund North Korea's efforts to develop the deadliest weapons known to humankind", Trump said.
The U.S. Treasury Department now had authority to target those that conduct "significant trade in goods, services or technology with North Korea".
Trump did not mention Pyongyang's oil trade.
The White House said North Korea's energy, medical, mining, textiles, and transportation industries were among those targeted and that the U.S. Treasury could sanction anyone who owns, controls or operates a port of entry in North Korea.
U.S. Treasury Secretary Steven Mnuchin said banks doing business in North Korea would not be allowed to operate in the United States as well.
"Foreign financial institutions are now on notice that going forward they can choose to do business with the United States or with North Korea, but not both," Mnuchin said.
The U.N. Security Council has unanimously imposed nine rounds of sanctions on North Korea since 2006, the latest this month capping fuel supplies to the isolated state.
South Korean President Moon Jae-in, who addressed the U.N. General Assembly, said sanctions were needed to bring Pyongyang to the negotiating table, but Seoul was not seeking North Korea's collapse.
"All of our endeavors are to prevent war from breaking out and maintain peace," Moon said in his speech. He warned the nuclear issue had to be managed stably so that "accidental military clashes will not destroy peace".
The United States and South Korea are technically still at war with North Korea because the 1950-53 Korean conflict ended with a truce and not a peace treaty.
The North accuses the United States, which has 28,500 troops in South Korea, of planning to invade and regularly threatens to destroy it and its Asian allies.
For a graphic on nuclear North Korea, click: http://fingfx.thomsonreuters.com/gfx/rngs/NORTHKOREA-MISSILES/010031V7472/index.html
(Additional reporting by Linda Sieg in Tokyo, Michael Martina and Christian Shepherd in Being, David Brunnstrom, Michelle Nichols and Arshad Mohammed in NEW YORK, Jeff Mason, Susan Heavey, Doina Chiacu, Eric Walsh and Tim Ahmann in WASHINGTON, and Soyoung Kim in SEOUL; Writing by Yara Bayoumy and Lincoln Feast; Editing by Paul Tait)