"We will completely liquidate all assets of South Korean firms and related institutions left behind in our region," the Committee for the Peaceful Reunification of Korea said in statement carried by the North's official KCNA news agency.

The projects involved are the Mount Kumgang tourism resort and the Kaesong joint industrial complex.

The committee said the move was a response to unilateral sanctions announced by South Korea on Tuesday to punish the North for its January nuclear test and last month's long-range rocket launch.

"From this time on, we nullify all agreements adopted by North and South Korea on economic cooperation and exchange programmes," the committee said.

The South announced the suspension of operations at the Seoul-funded Kaesong industrial complex last month, saying that money Pyongyang made from the venture was going towards its nuclear weapons programme.

The shock announcement prompted the North to expel all South Koreans from the estate and freeze all assets there, shutting down the last symbol of cross-border economic cooperation.

An association representing the 120 firms operating factories in Kaesong, which lies just across the North Korean border, estimated the value of the assets left behind at 820 billion won ($663 million).

The estate employed more than 53,000 North Koreans making items such as textiles, footwear and cheap electronics.

Mount Kumgang was the first major inter-Korean cooperation project, and thousands of South Koreans visited the Seoul-funded resort between 1998 and 2008.

The South suspended the tours in 2008 after a North Korean soldier shot dead a female tourist from the South who strayed into a restricted zone.

In response, the North scrapped a deal with the resort's developer -- Seoul's Hyundai Asan company -- and seized its properties there.

Earlier in the day North Korea fired two short-range ballistic missiles into the East Sea in the latest saber-rattling move amid the ongoing South Korea-U.S. military drills, South Korea's military said Thursday.

According to the Joint Chief of Staff (JCS), the two missiles were fired around 5:20 a.m. from North Hwanghae Province and hit waters northeast of the port city of Wonsan off the country's east coast.

Sources said the pair flew some 500 kilometers.

"The military is keeping close tabs on the situation and is prepared to deal with any North Korean provocations," the JCS said.

The latest provocation followed the North's test-firing a week ago of a new 300-millimeter-caliber multiple launch rocket system.

Pyongyang has been ratcheting up its bellicose threats against Seoul and Washington as the allies are staging the Key Resolve and Foal Eagle exercises, a command post exercise and field training war game, respectively. The weekslong exercises began Monday.

A day earlier, the North threatened to turn the allies' military installations into a "sea of fire" in a commentary published by its official Korean Central News Agency. The North has accused the allies of conducting the drills to "decapitate" its leadership and prepare for a "nuclear war of invasion."

Observers say Pyongyang's continued provocations also reflect its anger at the recent adoption of a U.N. Security Council sanctions resolution that punishes the isolated regime for its Jan. 6 nuclear test and Feb. 7 long-range rocket test. (From news reports)