North Korea has warned of retaliation after the US scrapped food aid over its rocket launch, raising fears of a new nuclear test, as China reportedly suspended a refugee deal with its wayward ally.

In a defiant statement, the nuclear-armed North said it was no longer bound by a bilateral agreement to halt testing of nuclear weapons and long-range missiles after Washington suspended much-needed food aid.

“We have thus become able to take necessary retaliatory measures, free from the agreement,” its foreign ministry said, accusing Washington of hostile acts.

South Korean analysts said they expect the North to follow up by staging a third nuclear weapons test, or launching another long-range missile.

The North also rejected condemnation by the UN Security Council, including its ally China, of the failed launch on Friday last week. Japan’s Yomiuri Shimbun newspaper said yesterday that China has suspended the refugee repatriation deal because it was not consulted about the launch, seen by the US and its allies as a covert test of ballistic missile technology.

The paper quoted two Chinese officials as saying the longstanding policy of swiftly returning North Koreans as economic migrants had been put on hold.