North Korea warns of 'all-out war'

(BAILOUT MAIN STREET NOW)--North Korea, which is accused of sinking a South Korean ship, has warned that it would launch an "all-out war," should an act of retaliation come about.

"If [South Korea] tries to deal any retaliation or punishment or if they try sanctions or a strike on us...we will answer to this with all-out war," North Korean naval spokesman Col. Pak In Ho was quoted by the Associated Press as saying on Thursday.

An inquiry, conducted by an international team of civilians and military, conceded earlier on Thursday that a torpedo fired by a North Korean submarine had sunken the Cheonan on March 26, killing 46 South Korean sailors.

The spokesman said the evidence presented to prove North Korea fired the torpedo was fabricated by Seoul.

His comments came after South Korean President Lee Myung-bak vowed to take strong counter-measures and called for an emergency meeting to be held on Friday.

"We will be taking firm, responsive measures against the North, and through international cooperation, we have to make the North admit its wrongdoing and come back as a responsible member of the international community," he said.

A statement released by UN Secretary General Ban Ki-moon's office found the result of the investigation "deeply troubling" and said that he will continue to closely follow the issue.