North Korea's Kim is fine, his deputy says

Kim Jong-il, long-suspected of suffering chronic illnesses, was conspicuously absent from a parade on Tuesday to mark the 60th anniversary of the communist state. A U.S. intelligence official said the reclusive leader may have suffered a stroke.

"(There is) no problem," North Korea's nominal number two leader, Kim Yong-nam, told Japan's Kyodo news agency in Pyongyang.

Senior North Korean diplomat Song Il-ho told Kyodo earlier: "We see such reports as not only worthless, but rather as a conspiracy plot."

If Kim does take a turn for the worse, it would open the possibility of the first serious power vacuum in a state that has repeatedly threatened to reduce its wealthy southern neighbor to ashes, test-fired missiles toward Japan and worked on building a nuclear arsenal to hold off the U.S. army.

South Korean President Lee Myung-bak called a hurried meeting with senior aides to discuss the North. His unification minister told a parliament committee there was no confirmation of any of the reports on Kim's health.

Analysts cautioned against reading too much into the public appearances of Kim, who can drop out of sight for months and then show up for inspection tours of a military base or a duck farm.

South Korean markets, used to speculation about the secretive state, gave a muted response to the reports of Kim's illness, with the main stock index mostly unchanged in early trading. But investors said the news reminded them of the country's risks.

If Kim is indeed gravely ill or even worse, dead, this cannot be good for the market in the short-term, as political instability and uncertainties on the North will heighten South Korea's geopolitical risks," said Lee Kyoung-su of Taurus Investment & Securities.

Studies have indicated it could cost South Korea hundreds of billions of dollars to absorb the destitute North due to its threadbare infrastructure, sparking worries a sudden collapse could wreck Asia's fourth-largest economy.

NUCLEAR DEALINGS
Kim's absence from the anniversary parade came just as the impoverished communist state appeared to be backing away from a deal with major powers on scrapping in its nuclear program in exchange for aid and an end to its international ostracism.

"In North Korea or China national anniversaries, especially the 10-year anniversaries, are big events, and for him not to appear suggests something is wrong," said Cai Jian, an expert on Korea at Fudan University in Shanghai.

Analysts speculated that if Kim were incapacitated, it would be nearly impossible for the stalled talks to move forward.

Kim's health and the person in line to succeed him are two of the most closely guarded secrets in the paranoid state.

South Korea said in a 2006 intelligence report that if Kim died, it expected the North Korean government to lapse into a brief coma and then hunker down with top military officials later battling for power, perhaps in partnership with one of Kim's three known sons.

Kim has not been seen as directly grooming any of his sons to take control. Kim himself was anointed successor by his father and state founder, Kim Il-sung, well before he took over after his father's death in 1994.