Moscow, Apr 20 (IANS/RIA Novosti): North Korea has reportedly threatened military action against South Korea unless Seoul apologises for "insulting" the centenary celebrations of Pyongyang's late founding leader Kim Il-sung.

Pyongyang said it will wage a "sacred war to wipe out the group of the Lee Myung-bak group of traitors" and "blow up everything" in Seoul, in a series of statements carried by the official KCNA news agency.

The threats follow comments by South Korean President Lee Myung-bak last week that North Korea's failed rocket launch cost Pyongyang about $850 million, and that it could have spent the money towards buying 2.5 million tonnes of corn, the Korea Times reported.

North Korea has suffered from acute food shortage since a famine in the 1990s.

South Korea also said a further $350 million went towards "propaganda purposes" and renovating a landmark hotel for the centenary festivities, the equivalent of feeding North Korea's 24 million people for 100 days.

Pyongyang said the rocket would put an earth observation satellite into orbit, but the US said it was cover for a missile technology test.

The UN Security Council condemned the launch and ordered fresh sanctions.