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The Taepodong missile could reach Alaska (archive picture)

"This is not the way you conduct business in the world," the president said, adding that North Korean missile tests made people "nervous".

The US government has said North Korea seems to be moving towards testing a long-range missile which could have the range to reach US territory.

Pyongyang says it is no longer bound by a self-imposed moratorium on tests.

It argues that a ban on missile tests, dating from 1999, no longer applies as it is no longer in direct talks with Washington.

But it is also reportedly calling for talks with Washington to resolve the issue, which analysts say suggests North Korea is trying to use the row for wider, diplomatic purposes.

Mr Bush's national security adviser, Stephen Hadley, said on Tuesday that North Korea appeared to be moving towards a missile launch, although "the intelligence is not conclusive at this point".

'Positive sign'

Speaking after an annual summit with EU leaders in Vienna, Mr Bush said: "The North Koreans have made agreements with us in the past and we expect them to keep their agreements, for instance on test launches."

Tracking N Korea's intent N Korea's missile programme

"It should make people nervous when non-transparent regimes who have announced they have nuclear warheads, fire missiles," he said.

President Bush said that he was "pleased" the Chinese government had also advised North Korea against testing the missile.

This is a "positive sign", he said, adding that Pyongyang must realise there are "certain international norms" to live by.

HAVE YOUR SAY This is a case of North Korea's typical brinksmanship foreign policy   Shaun Carr, New York, USA   Send us your comments

South Korea has also suggested it may suspend aid shipments to North Korea if the missile test goes ahead.

Amid growing pressure on Pyongyang, former South Korean President Kim Dae-jung has cancelled a planned trip to the North Korean capital.

North Korea last tested a long-range missile in 1998 when it fired a Taepodong-1, with a range of 2,000km (1,200 miles), over northern Japan.

The US says North Korea implicitly agreed not to test-launch any new missiles at multi-party talks on its nuclear programme last year. But the six-party talks have been stalled for months.

How US missile shield works

Correspondents say North Korea may be now using the missile threat to try to break the deadlock, or as a bargaining chip in negotiations.

The White House has refused to say what action the US might take if the missile is launched.

According to the BBC's defence and security correspondent, Rob Watson, it is likely that the US has activated its still unproven and limited anti-missile defence system.

The system, which is based on linking radar and satellite information to nine interceptor missiles based in Alaska and California, has failed to take out a single missile in recent tests.