North Korea's top military body issued fresh warnings Thursday to the United States and South Korea over their "hostile" policies towards Pyongyang, as Seoul conducted a series of naval live-fire drills.

The National Defence Commission (NDC) criticised US sanctions imposed after the North's alleged cyber attack on Sony Pictures and said Pyongyang would respond forcefully to continued provocation.

"The US ... has never experienced a hail of bullets and shells on its own territory," the commission said in a statement carried by the North's official KCNA news agency.

"The US should roll back its hostile policy ... if it does not want to suffer a war disaster," it added.

US President Barack Obama last week authorised a new layer of sanctions on several Pyongyang institutions and officials, in the wake of the crippling hacking attack on the Hollywood movie studio.

The FBI is convinced the North was behind the cyber offensive, although some experts have raised doubts about the bureau's conclusions.

Hackers attacked Sony Pictures in late November and threatened the company over the looming Christmas release of the comedy film "The Interview," which depicts a fictional CIA plot to kill North Korea's leader.

The NDC statement also demanded that South Korea cancel its annual joint military exercises with the United States -- a perennial source of friction on the divided peninsula.

"The South Korean authorities should be clear whether they want dialogue or confrontation," the commission said.

Seoul's defence ministry stressed the joint drills would go ahead as planned, and spokesman Kim Min-Seok said the South Korean navy had carried out its first live-fire drills of the year Thursday off the west and east coasts.

In a New Year speech, North Korean leader Kim Jong-Un had indicated he was open to the possibility of a summit with South Korean President Park Geun-Hye.

But with both Pyongyang and Seoul insisting on incompatible pre-conditions for substantive talks, the likelihood of any high-level dialogue in the near future seems remote.