(For full coverage of the missile crisis, click [nSP469853])

* North Korean launch imminent, officials say

* Obama warns Pyongyang against launch

* U.S. envoy hopes for return to talks after dust settles

* No new sanctions in U.N. Security Council, sources say

* Kim Jong-il's health improving, says South Korea's Lee (Adds former head of the U.S. Missile Defense Agency)

By David Brunnstrom and Sean Maguire

STRASBOURG/LONDON, April 3 (Reuters) - North Korea is preparing a rocket to blast off as early as Saturday, officials said, readying what Pyongyang describes as a satellite launch but is widely regarded as a disguised long-range missile test.

U.S. President Barack Obama said the international community would take action if North Korea went ahead with the launch to show Pyongyang, which tested a nuclear device in 2006, it could not act with impunity.

"We will work with all interested partners in the international community to take appropriate steps to let North Korea know that they cannot threaten the safety and stability of other countries with impunity," Obama told a news conference with French President Nicolas Sarkozy in Strasbourg, France.

While Washington urged Pyongyang to reconsider its plan to fire off a rocket between Saturday and Wednesday, a U.S. envoy suggested it may be a foregone conclusion and said he hoped to bring the North back to talks on ending its nuclear programs.

AFTER THE DUST SETTLES

"We will be ... working very closely with our partners to ensure that after the dust of the missiles settles a bit, we get back to the longer-term priority of the ... six-party talks," Stephen Bosworth, the U.S. special representative for North Korea, told reporters in Washington. [nN03336594]

While saying the talks among the two Koreas, China, Japan, Russia and the United States were central to efforts to get North Korea to give up its nuclear programs, he said Washington was ready for direct contact with Pyongyang at any time.

North Korea believes it has the right to launch the rocket as a part of a peaceful space program, while the United States views it as a violation of a U.N. Security Council resolution passed in 2006 after Pyongyang's nuclear and missile tests.

That resolution, number 1718, demands North Korea "suspend all activities related to its ballistic missile program."

South Korean President Lee Myung-bak said it was almost certain the North would fire the missile and, if weather permits, the launch could happen as soon as Saturday. [nSEO50287]

Analysts said the launch may help North Korean leader Kim Jong-il shore up support after a suspected stroke in August raised questions of his grip on power and bolster his hand in using military threats to win concessions from global powers.

South Korea and Japan say the launch is a disguised test of the Taepodong-2 missile designed to carry a warhead capable of reaching Alaska. In its only previous test flight, in July 2006, the missile blew apart about 40 seconds after launch.

The former head of the U.S. Missile Defense Agency said North Korea would show an ability to hit much of the United States with a long-range missile if it succeeds in putting a satellite into space. [nN03358205]

"And with advanced propellants ... they could range all of the United States," retired Air Force Lieutenant General Henry Obering told a briefing organized by the Missile Defense Advocacy Alliance, a grassroots- and industry-funded group.

"That's one of the reasons that we have our ears up and (are) very alert -- because it's a major step forward."

FURTHER PUNISHMENT

With an estimated range of around 6,700 km (4,200 miles), the Taepodong-2 now being prepared for launch is supposed to fly over Japan, dropping boosters to its west and east on a path that runs southwest of Hawaii.

"We favor sending out a very strong and stern message to the North Koreans that the international community does not condone nor will it accept North Korea engaging in such actions," South Korea's Lee told reporters in London where he had attended the G20 summit.

U.N. Security Council diplomats told Reuters on condition of anonymity that no one was considering imposing new sanctions but the starting point could be discussing a resolution for the tougher enforcement of earlier sanctions.

Both Russia and China, the latter the nearest the reclusive North has to a major ally, have made clear they would block new sanctions by the Council, where they have veto power.

Lee said the launch would only harm Pyongyang in talks with regional powers over its nuclear weapons program.

"While in the short term it might give them an upper hand in the negotiations, in the long term the trust given them by the international community will only lessen and this will not be in their benefit," he said.

South Korea, along with China, Japan, Russia and the United States, has been trying for years to persuade the impoverished North to give up its efforts to build a nuclear arsenal in return for massive aid.

Financial markets in South Korea, accustomed to the North's military taunts over the years, have shrugged off the impending launch. The last test led to a temporary fall in the Japanese yen, a drop in Seoul shares and a small rise in gold prices.

HEALTH AND SUCCESSION

Some analysts have suggested a successful launch could give North Korea's Kim confidence in the face of possible opposition from his powerful military to name one of his sons as a successor. Kim was himself designated by his father as heir.

Speculation has grown that ill-health may be sapping Kim's iron grip on power, something Lee dismissed.

"It seems that he does not have a trouble governing North Korea," he said. "His state of health seems to have improved."

Japan, the United States and South Korea said they have no plans to shoot down the rocket unless it threatens their territory. Experts said rising tensions could threaten North Asia, which makes up about one-sixth of the global economy.

But that has not stopped the North from making threats. It said any attempt to intercept the missile will be considered an act of war and any U.N. punishment could be met by a resumption of its plant that makes arms-grade plutonium. (Additional reporting by Jon Herskovitz and Kim Junghyun in Seoul, Linda Sieg in Tokyo, Jonathan Thatcher in London and Arshad Mohammed and Jim Wolf in Washington; Editing by John O'Callaghan)

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