By Ju-min Park and Ben Blanchard
BEIJING/SEOUL (Reuters) - North Korea, engaged for weeks in threats of war with South Korea and the United States, appears to be preparing for a fourth nuclear test, with movement at its atomic test site mirroring earlier blasts, a newspaper reported on Monday.
The report, quoting a senior South Korean government official, followed unusually harsh rebukes of North Korea by China, Pyongyang's sole diplomatic and financial ally.
Speculation has been building that North Korea might undertake some new provocative action this week - possibly a missile test. It was February's nuclear test that prompted tougher U.N. sanctions that have angered Pyongyang.
North Korean authorities have told embassies in Pyongyang they could not guarantee their safety from Wednesday - after saying conflict was inevitable amid joint U.S.-South Korean military exercises due to last until the end of the month. No diplomats appear to have left the North Korean capital.
U.S. Secretary of State John Kerry visits Seoul later this week and the North holds celebrations and possibly military demonstrations next Monday to mark the birth date of its founder, Kim Il-Sung - grandfather of the current leader, 30-year-old Kim Jong-un.
South Korea's JoongAng Ilbo daily, quoting a senior South Korean government official, said activity at North Korea's atomic test site was similar to that observed before the February 12 blast.
"There are recent active movements of manpower and vehicles at the southern tunnel at Punggye-ri," the official told the newspaper.
South Korea's Defense Ministry was unruffled by the report, saying it has been long prepared for a new test.
"That has not changed at this point. Vehicles and people can come and go because there are several facilities around the nuclear test site," spokesman Kim Min-seok told a briefing.
Pyongyang moved what appeared to be a mid-range Musudan missile to its east coast, according to media reports last week.
The turmoil has hit South Korean financial markets, long used to upsets over the North. Shares in Seoul dipped to a four-month low on Monday as the rhetoric prompted selling by foreigners after substantial losses on Friday.
Moody's credit rating agency said in a report on Monday that the rise in North Korean rhetoric and the re-starting of a nuclear plant to make fissile material had made the current situation "more dangerous" and negative for South Korean assets.
A prominent symbol of inter-Korean cooperation, the Kaesong industrial park inside the North Korean border, is also in doubt after Pyongyang prevented southerners from entering last week. Several hundred South Koreans inside have since returned home.
A spokesman for the South Korean Unification Ministry said 13 companies out of around 120 firms had stopped operations there because of a lack of raw materials.
North Korea would seek to get the most mileage from whatever action it undertook, said Yang Moo-Jin of the University of North Korean studies in Seoul.
"North Korea does things with the maximum impact in mind. It has not set a no-fly zone yet, which it does every time they do a ballistic missile test," he said.
Pyongyang has shown no sign of preparing its 1.2 million-strong army for war, indicating the threats are partly intended for domestic purposes to bolster Kim, the third in his family dynasty to rule North Korea.
North Korea told China it was prepared to stage one or even two more nuclear tests this year in an effort to force the United States into diplomatic talks with Pyongyang, a source with direct knowledge of the message told Reuters after the February 12 test.
The North has also been reacted furiously to annual South Korean-U.S. military exercises off the Korean peninsula, which have involved the dispatch of stealth bombers from their U.S. bases.
But a long scheduled U.S. missile launch was postponed at the weekend to try to ease tensions. The U.S. commander of American forces in South Korea also canceled a trip to Washington due to the situation on the peninsula.
"NORTH KOREA IS NOT LISTENING TO CHINA"
The weekend message from China was one of exasperation after years of trying to coax North Korea out of isolation and to embrace economic reform.
No country "should be allowed to throw a region and even the whole world into chaos for selfish gain", President Xi Jinping told a forum on China's southern island of Hainan. He did not name North Korea but he appeared clearly to be referring to Pyongyang.
Foreign Minister Wang Yi said China opposed "provocative words and actions from any party in the region and do not allow trouble-making on China's doorstep".
U.S. lawmakers said China was not doing enough.
Republican Senator John McCain, a member of the Senate Armed Services Committee, criticized China's "failure to rein in what could be a catastrophic situation". China's actions, he told CBS television, "has been very disappointing. More than once, wars have started by accident and this is a very serious situation."
Analysts said that whatever influence China once had as North Korea's principal backer had waned.
"China has some say over its economic relations with the North but doesn't have the power to say 'don't do it' when it comes to nuclear weapons and political and military issues," said Kim Yeon-chul, professor of unification studies at South Korea's Inje University.
"North Korea is not listening to China."
Beijing negotiated the new U.N. sanctions with Washington and has said it wanted them implemented. The measures tighten financial curbs on North Korea, order checks of suspicious cargo and strengthen a ban on luxury goods entering the country.
North Korean experts say the young Kim has also failed to pay fealty to China as his father, Kim Jong-il, and his grandfather did. He has not visited China since taking over when his father died at the end of 2011.
(Additional reporting by Jack Kim in Seoul, David Morgan, Aruna Viswanatha and Mark Felsenthal in Washington. Writing by Ron Popeski. Editing by Dean Yates)