Could this be the first in a series of nuclear and economic dominos?Far Eastern shares have fallen sharply after North Korea said it had carried out its first nuclear weapon test.

Following Pyongyang's announcement, South Korea's main Kospi index dropped by as much as 3.6%, while Hong Kong's Hang Seng fell 1.17%.

Although stock markets were closed in Japan for a public holiday, the yen slumped to a seven-month low.

North Korea's test came in defiance of international protests including strong warnings from both China and Japan.

'Further reactions'

Analyst Jackson Wong, an investment manager at Tanrich Securities in Hong Kong, said stocks were down "as investors were worried that political tensions will trigger a sell down in Asian markets".

"Trade in coming days will likely depend on North Korea's further actions regarding the test and how countries like the US react to North Korea's move," he added.

Mr Wong said a key test will be how Japan's Nikkei reacts when it reopens on Tuesday.

Fellow Hong Kong-based analyst, Wang Qing, an economist at Bank of America, agreed that the ongoing reaction of Far Eastern markets would depend upon the response of the international community.

"The economy of North Korea is virtually closed from the rest of the world and its regional impact won't be very significant unless there was a major military confrontation," he said. Text of announcement:"The field of scientific research in the DPRK successfully conducted an underground nuclear test under secure conditions on October 9, 2006, at a stirring time when all the people of the country are making a great leap forward in the building of a great, prosperous, powerful socialist nation.

"It has been confirmed that there was no such danger as radioactive emission in the course of the nuclear test as it was carried out under scientific consideration and careful calculation.

"The nuclear test was conducted with indigenous wisdom and technology 100 percent. It marks a historic event as it greatly encouraged and pleased the KPA and people that have wished to have powerful self-reliant defense capability.

"It will contribute to defending the peace and stability on the Korean Peninsula and in the area around it." Hold on to your hats.