SEOUL (Reuters) - South Korea is expected to announce as early as Wednesday plans to curtail the North's suspected trade in weapons of mass destruction, further raising tensions with Pyongyang after the North vowed to quit nuclear disarmament talks.

North Korea said on Tuesday it would re-start a plant that makes bomb-grade plutonium in response to a U.N. rebuke over its launching of a long-range rocket 10 days ago.

The International Atomic Energy Agency (IAEA) has said its inspectors have also been ordered to leave North Korea.

The plan, called the Proliferation Security Initiative (PSI) and joined by 94 countries, would let South Korea stop and board North Korean ships sailing in its territorial waters when suspected of carrying arms or other illicit materials.

North Korea's threat on Tuesday to quit six-party disarmament talks poses the first big foreign policy test for the Obama administration.

U.S. Secretary of State Hillary Clinton criticized the expulsion of the U.N. nuclear inspectors as an unnecessary provocation but said Washington was ready to talk.

"Obviously we hope that there will be an opportunity to discuss this not only with our partners and allies but also eventually with the North Koreans," Clinton said in Washington.

North Korea's expulsion of U.N. nuclear inspectors is a major reversal of steps it took in 2007 halting the operation of the Yongbyon nuclear complex and allowing the IAEA in to seal facilities there.

INSPECTORS EXPELLED

The U.N. Security Council on Monday condemned North's launch of a long-range rocket, declaring it was a violation of a U.N. resolution adopted in 2006 after the North's nuclear and missile tests and ordered the enforcement of existing sanctions.

Shipments of energy aid to the North has slowed since last year because of a dispute over how to verify the North's nuclear inventory under the disarmament deal struck by the South and North Korea, the United States, Japan, Russia and China in 2005.

Experts said the North could have its plant that separates plutonium from spent fuel rods up and running again in as little as three months.

Announcements like this from North Korea are part of a familiar pattern of behavior and as such it is not likely to be a destabilizing factor for regional economies.

Japan's conservative Yomiuri newspaper sounded a warning that the six-way nuclear disarmament talks may be about to fall apart and pressed China, the North's key ally and main benefactor, to do more.

"As the North's largest trading partner and biggest supporter, we hope China will take every effective measure it can against Pyongyang, including a strict application of sanctions on the nation," the daily said in an editorial.

China has called for calm and restraint from all sides in the six-party talks while expressing hope that the negotiations it hosts would resume.

New U.N. measures may cause Beijing to curb trade in a few items but some analysts said it is likely to maintain its flow of energy, grains and other materials that prop up the North's broken-down economy.