By Ju-min Park and Jack Kim
SEOUL (Reuters) - North Korea celebrated the anniversary of its founder's birth on Monday and abandoned its shrill threats of war against the United States and the South, easing tensions in a region that had seemed on the verge of conflict.
The North has threatened nuclear attacks on the United States, South Korea and Japan after new U.N. sanctions were imposed in response to its latest nuclear arms test in February.
Many Pyongyang watchers has expected a big military parade to showcase North Korea's armed forces on the "Day of the Sun", the date the North's founder Kim Il-Sung was born.
But on Monday, the 101st anniversary of Kim's birth was marked in the North's capital, Pyongyang, with a festival of flowers named after Kim.
In contrast to weeks of tirades against its enemies, North Korean state media made hardly a mention of conflict.
"South Korea and the United States have sent a message for dialogue, so for now the North is switching to that mode," said Yang Moo-jin of the University of North Korean Studies in Seoul.
"The North's strategic intention has been to try to get some kind of response from the United States and South Korea and now they have that. They won't be brushing away the suggestions to enter dialogue lightly."
The United States has offered talks, but on the pre-condition that North Korea abandons its nuclear weapons ambitions. North Korea deems its nuclear arms a "treasured sword" and has vowed never to give them up.
Nevertheless, U.S. Secretary of State John Kerry, ending a trip to the region dominated by concern about North Korea, stressed his interest in a diplomatic solution.
"The United States remains open to authentic and credible negotiations on denuclearisation, but the burden is on Pyongyang," he said. "North Korea must take meaningful steps to show that it will honour commitments it has already made, and it has to observe laws and the norms of international behavior."
On Sunday evening, however, Kerry appeared to open the door to talking without requiring the North to take denuclearisation steps in advance. Beijing, he said, could be an intermediary.
Earlier, Kerry said he believed China, the North's sole economic and political benefactor, should put "some teeth" in efforts to persuade Pyongyang to alter its policies.
The Chinese Communist Party mouthpiece, the People's Daily, warned on Monday that tensions could get out of control.
"It does not matter if it is intentional or accidental, even the smallest thing could cause the situation to change rapidly and perhaps get totally out of control," the paper said.
South Korean and U.S. officials said last week North Korea appeared set to test-launch a medium-range missile as a show of strength linked to Monday's anniversary of the birth of North Korean state founder Kim Il-Sung.
North Korea has conducted three nuclear tests but it was not believed to be near weapons capability.
South Korea said it remained on guard against any missile launch and it regretted the North's rejection of an offer of talks made last week by President Park Geun-hye. It said the offer would remain on the table.
Missile launches and nuclear tests by North Korea are both banned under U.N. Security Council resolutions, that were expanded after its third nuclear test, in February.
The aim of the North's aggressive acts, analysts say, is to bolster the leadership of Kim Jong-un, the 30-year-old grandson of the nation's founder, or to force the United States to hold talks with the North.
The North has also been angry about annual military exercises between U.S. and South Korean forces, describing them as a "hostile" act. The United States dispatched B52 and B2 stealth bombers from their bases to take part.
Yoji Koda, a former commander in chief of the Japanese naval fleet, told Reuters he believed North Korea's threats were part of a "calculated provocation", not a prelude to an attack.
He said indications the United States was softening a forceful stance to the North had given its leader Kim Jong-un the opportunity to tone things down.
"This has enabled North Korea to declare victory and sheathe its swords," he said.
Kim Il-Sung led his country from its founding in 1948 through the 1950-53 Korean War and until he died in 1994. His son, Kim Jong-il, then took over.
KCNA, the North's news agency, reported that people were flocking to a statue of Kim Il-Sung, uttering "My father, our great leader".
"This sincere expression comes from the bottom of their hearts," it said.
Kim Jong-un, the third Kim to rule in Pyongyang, attended a midnight celebration of his father and grandfather's rule with top officials, including his kingmaker uncle Jang Song-thaek.
North Korean defectors said army units were expected to contribute for the celebration of Kim's birthday and in turn, the government, which has struggled to feed its people, had handed out extra rations of rice and corn.
"People are decorating streets for political events. It's never like war time," said Seo Jae-pyoung, a defector who lives in South Korea who spoke last week to an acquaintance in the North. "The government, which normally can't distribute rice, has already given about one week or two week's special rations."
North Korea has repeatedly stressed that it fears the United States wants to invade it and has manipulated the United Nations to weaken it. At the weekend, the North rejected the overture by new South Korean President Park as a "cunning" ploy.
"We will expand in quantity our nuclear weapons capability, which is the treasure of a unified Korea ... that we would never barter at any price," Kim Yong-nam, North Korea's titular head of state, told a gathering of officials and service personnel applauding the achievements of Kim Il-Sung.
(Additional reporting by Arshad Mohammed and Kiyoshi Takenaka in TOKYO, Ben Blanchard in Beijing; Somang Yang in SEOUL; Writing by Robert Birsel; Editing by Raju Gopalakrishnan)