The United States on Monday slapped sanctions on North Korea's primary foreign exchange bank and four senior officials, upping the pressure on Pyongyang to abandon its nuclear program.

The new US measures came as South Korea and the United States launched joint drills involving thousands of troops, defying the North's apocalyptic threat to repudiate the 60-year-old Korean War armistice in retaliation.

The start of the two-week "Key Resolve" exercise fuels already escalating tensions on the Korean peninsula, with Pyongyang having threatened nuclear war over UN sanctions imposed in response to its third nuclear test.

The United States will "continue to work with allies and partners to tighten national and international sanctions to impede North Korea's nuclear and missile programs," US national security advisor Tom Donilon said in New York.

The US Treasury imposed sanctions on the Foreign Trade Bank (FTB) of North Korea and Paek Se-Bong, the chairman of the North's Second Economic Committee, which is responsible for overseeing the production of ballistic missiles.

Separately, the US State Department named to its sanctions list three North Korean officials with links to Pyongyang's weapons program.

They are Pak To-Chun, head of the Munitions Industry Department, Chu Kyu-Chang, alternate member of the Korean Worker Party's political bureau, and O Kuk-Ryol, Vice Chairman of the North Korean National Defense Commission.

"North Korea uses FTB to facilitate transactions on behalf of actors linked to its proliferation network, which is under increasing pressure from recent international sanctions," said David Cohen, Treasury under secretary for terrorism and financial intelligence.

The State Department warned Pyongyang that it would "continue to face isolation if it refuses to take concrete steps to comply with its international obligations and address the concerns of the international community."

US sanctions forbid any US individual, business or organization from any transactions with the people or groups named.

Donilon, speaking to the Asia Society, called such statements "highly provocative" but reaffirmed that Washington was "committed to the defense of our homeland and our allies.

"North Korea's claims may be hyperbolic, but as to the policy of the United States, there should be no doubt: We will draw upon the full range of our capabilities to protect against, and to respond to, the threat posed to us and to our allies by North Korea."

He also reiterated that Washington was willing to hold "authentic negotiations with North Korea," but said it "refuses to reward bad North Korean behavior."

"To get the assistance it desperately needs and the respect it claims it wants, North Korea will have to change course," he said.

"No country, including China, should conduct 'business as usual' with a North Korea that threatens its neighbors. China's interest in stability on the Korean Peninsula argues for a clear path to ending North Korea's nuclear program," he stressed.

China last week backed the UN Security Council resolution that stiffened restrictions on North Korea's financial dealings, but has also said sanctions are not the "fundamental way" to resolve the crisis.