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By Jack Kim

SEOUL, Jan 19 (Reuters) - South Korean President Lee Myung-bak on Monday named as his unification minister an architect of his hardline policy on the communist North two days after the latest military threats by Pyongyang.

The North Korean threat to "wipe out" the South was largely dismissed by Lee's government as a repeat of past rhetoric, but analysts saw it as an attempt to grab the attention of Barack Obama just days before his is sworn in as U.S. president.

Hyun In-taek who takes over at the Unification Ministry, which deals with the communist neighbour, is a conservative scholar who helped Lee draw up the policy that demands Pyongyang drop its nuclear arms ambitions in return for South Korea's economic help.

His appointment is likely to further aggravate Pyongyang, which has called Lee "a traitor to the nation" for his North Korea policy and for ending what had been a free flow of aid under his two liberal predecessors.

Multilateral talks on halting North Korea's nuclear drive sputtered during the final months of President George W. Bush's term as Pyongyong re-positioned to press for more concessions from the new administration in Washington, experts said.

South Korea's military has been on heightened alert since a North Korean army spokesman said on Saturday that Seoul had "opted for confrontation" and that the North's forces were "compelled to take an all-out confrontational posture to shatter them". [ID:nSEO230082]

Fishing vessels have been advised not to sail near waters at the centre of naval border disputes with the North.

The North's weekend comments came as a U.S. expert returning from talks in Pyongyang said the reclusive state had "weaponised" enough plutonium for four to five nuclear weapons. [ID:nSP371965]

South Korea's financial markets showed little reaction to the latest developments. Five-year credit default swaps (CDS), an indicator of perceived economic risk in a country, narrowed to 290 basis points early on Monday from 305 on Friday, suggesting investors were not particularly concerned with the North's threats.

SOUTH DISMISSIVE

South Korea's Defence Ministry has brushed off the North Korean threat. "Much of the comments are the usual rhetoric and arguments that have been issued previously," Defence Ministry spokesman Won Tae-jae told a news briefing.

"North Korea talks a lot but we will have few words and instead respond with action."

Won said all commanding military officers were at their posts overseeing beefed-up surveillance to detect and counter any moves by the North but no unusual activities have been seen.

Analysts said the comments may have been aimed less at the South than at grabbing the attention of Obama, who will be inaugurated as U.S. president on Tuesday.

"That the North issued this statement just before the new U.S. administration takes office means it is trying to tell the U.S. that North Korea issues can't be put in the back burner," Dongguk University professor Koh Yu-hwan said.

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Q+A-Why is North Korea firing off more rhetoric? double-click on [ID:nSEO301081]

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The latest remarks from Pyongyang were largely ignored in Seoul, just 50 miles (70 km) from the heavily armed border but long accustomed to threats from the impoverished North. Sightseeing tours to the border continued as normal.

The statement by the North's army spokesman followed months of increasingly angry verbal attacks on the year-old conservative government of Lee Myung-bak, who has said he would get tough on the North and end years of unconditional aid.

Late last year, Pyongyang closed most border traffic between the two states.

A Unification Ministry official in Seoul said the fact the North's army spokesman was in full military uniform and had a stern tone as he read the lengthy statement was very unusual.

A similar threat against the South in December 1998 was made in the backdrop of escalating tension in the midst of an earlier nuclear crisis over suspected underground atomic installations.

A team of South Korean nuclear negotiators and experts are expected to end on Monday a visit to the North's atomic complex, where they inspected unspent fuel rods that regional powers in talks to end Pyongyang's nuclear ambition are considering buying. (Additional reporting by Kim Junghyun; Editing by Jonathan Thatcher and Jeremy Laurence)

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