N. Korean envoy says war is near.

By Stephanie Nebehay

GENEVA (Reuters) - A North Korean envoy said on Thursday that war could erupt at any time on the divided Korean peninsula because of tension with Seoul over the sinking of a South Korean warship in March.

"The present situation of the Korean peninsula is so grave that a war may break out any moment," Ri Jang Gon, North Korea's deputy ambassador in Geneva, told the United Nations-sponsored Conference on Disarmament.

North Korea's troops were on "full alert and readiness to promptly react to any retaliation," including the scenario of all-out war, he told the forum.

Ri, departing from his prepared remarks, said that only the conclusion of a peace treaty between the two countries would lead to the "successful denuclearization" of the peninsula. The 1950-53 Korean War ended with an armistice but no formal peace treaty.

Communist North Korea, hit with U.N. sanctions after testing nuclear devices in 2006 and 2009, is still under international pressure to dismantle its nuclear programme.

Ri repeated Pyongyang's assertion that North Korea had nothing to do with the sinking of the Cheonan warship which killed 46 sailors -- the deadliest military incident since the Korean War.

South Korea has accused North Korea of firing a torpedo at the vessel and said it will bring the case to the U.N. Security Council. A report by international investigators last month also accused North Korea of torpedoing the vessel.

Ri accused South Korea of trying to create a shocking incident in order to ignite a campaign against the Democratic People's Republic of Korea (DPRK), North Korea's official name.

South Korean ambassador Im Han-taek took the floor at the Geneva forum to voice regret at Ri's remarks, adding: "We believe it is only for propaganda purposes."

U.S. disarmament ambassador Laura Kennedy also rejected Ri's accusations that Washington had backed Seoul in "groundlessly" blaming the sinking on a North Korean submarine.

"I agree that the situation on the Korean peninsula is very grave but I disagree with the statement made and reject those allegations against my country," Kennedy said.

"The investigation carried out was scrupulous and painstaking and we certainly accept without doubt the results which clearly indicated where the blame lay," she added.

(Editing by Jonathan Lynn and Angus MacSwan)