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Kim's death immediately raised questions whether his young heir-apparent son, Jong-un, would be able to take over the totalitarian nation as smoothly as the leader did after his father and national founder Kim Il-sung died in 1994.
But state media reported the North's military and people pledged loyalty to the young leader who is believed to be in his late 20s.
South Korea's military also said the North's military has shown no unusual activity.
Earlier, Pyongyang's Korean Central News Agency said in an urgent dispatch that Kim "passed away from a great mental and physical strain" during a train ride at 8:30 a.m. on Saturday. A female newscaster, clad in a black funeral dress, tearfully announced the death on state TV.
KCNA said the medical cause was an "advanced acute myocardial infarction, complicated by serious heart shock," using the technical terms for a heart attack. His father, Kim Il-sung, also died of a heart attack.
"He suffered an advanced acute myocardial infarction, complicated by serious heart shock, on a train on December 17 ... from a great mental and physical strain caused by his uninterrupted field guidance tour for the building of a thriving nation," KCNA said.
Kim's health is believed to have worsened after he apparently suffered a stroke in 2008.
His body will be placed in the Kumsusan Memorial Palace where the embalmed body of his father and the late national founder lies, according to the KCNA. The North set a mourning period from Dec. 17 to Dec. 29, though it said it won't accept foreign delegations at the funeral ceremony scheduled to be held in Pyongyang on Dec. 28.
Kim's heir-apparent son, Jong-un, was named first in the membership list of the North's the 232-member funeral commission, an apparent indication that the younger Kim will chair the commission.
That could also be seen as a possible sign that the communist nation is under control. Experts had suggested that any sudden incapacitation of the autocratic leader could lead to a power struggle in the totalitarian nation.
The late leader had been grooming his youngest son, believed to be in his late 20s, as his successor, promoting him to the rank of four-star general and placing him in key posts at the ruling Workers' Party last year.
South Korea put its military and police on high alert and ordered all of its diplomatic missions overseas to go on standby. The Joint Chiefs of Staff (JCS) said it has increased its monitoring activities along the border, but no unusual activity had been observed from the North.
Seoul also banned its citizens from visiting the North, except those traveling to a South Korean-run joint industrial complex in the North's border city of Kaesong.
JCS Chairman Army Gen. Jung Seung-jo held an emergency meeting with Gen. James D. Thurman, the commander of the U.S. forces in South Korea, to discuss monitoring activities. JCS officials said the generals agreed to bolster their sharing of information and intelligence.
The two also agreed not to raise the level of the two countries' anti-North Korea surveillance alert, called Watchcon.
"Since there is a great deal of shock within North Korea after the passing of its leader, the generals decided South Korea and the United States should not create an unnecessary sense of crisis," a South Korean military official said. "They said we should remain calm in our response while bolstering our defense posture, keeping in mind that Kim's death is something that took place in North Korea."
President Lee Myung-bak presided over an emergency meeting of the National Security Council after calling off all of his scheduled plans for later in the day. Lee also ordered all government officials to be placed on emergency response.
Lee called on South Koreans to remain calm and focus on their usual work, his office said.
"The government will remain thoroughly prepared while keeping a close watch over the situation in North Korea," the presidential office said in a statement. "The government will also cooperate closely with the international community to maintain peace and safety on the Korean Peninsula."
Lee also spoke by phone with U.S. President Barack Obama and agreed that the two allies will work closely together in keeping a close watch over the communist North and coping with the aftermath of Kim's death, presidential spokesman Park Jeong-ha said.
The White House said Obama "reaffirmed the United States' strong commitment to the stability of the Korean Peninsula and the security of our close ally."
"The two leaders agreed to stay in close touch as the situation develops and agreed they would direct their national security teams to continue close coordination," it said.
Later, Lee had a telephone conversation with Japanese Prime Minister Yoshihiko Noda where the two leaders pledged close cooperation, including a brisk exchange of information between the two sides, the spokesman said.
Lee also discussed the situation with Russian President Dmitry Medvedev and agreed that the two countries will cooperate closely for peace and stability on the Korean Peninsula, according to the presidential spokesman.
Kim's death came at a time of a flurry of diplomatic efforts to resume long-stalled talks on ending Pyongyang's nuclear weapons program. North Korea and the United States were expected to hold a third round of bilateral nuclear talks in Beijing this week.
The planned talks are expected to be canceled, a government official said. North Korea had been expected to announce during the talks that it would suspend its uranium enrichment program and accept U.N. nuclear monitors in exchange for food aid.
That would mark a breakthrough that could lead to the resumption of the broader six-nation talks that have been suspended since the last session in late 2008. The talks bring together the two Koreas, China, Japan, Russia and the U.S.
North Korea conducted two nuclear tests, first in 2006 and second in 2009. Pyongyang is believed to have stockpiled enough plutonium for at least half a dozen nuclear bombs, experts do not believe the country has mastered the technology to put a nuclear warhead on a missile.
Kim's death also followed years of tension on the Korean peninsula.
Inter-Korean relations warmed significantly after the first summit between Kim and the South's then-President Kim Dae-jung in 2000. The North's late leader held a second summit in 2007 with then-President Roh Moo-hyun.
Inter-Korean ties frayed badly, however, after President Lee took office in early 2008 with pledges to halt aid to the impoverished North and link future assistance to progress towawrd ending Pyongyang's nuclear weapons programs.
The strained relations deteriorated further after North Korea torpedoed a South Korean warship in waters near their disputed border in March last year and shelled a border island in November. The attacks left a total of 50 South Koreans dead.
North Korea is one of the world's poorest nations. It has relied on foreign handouts to feed its 24 million people after natural disasters and mismanagement devastated its economy in the mid-1990s.
The late North Korean leader has long been accused of seeking nuclear, missile and other weapons of mass destruction programs while starving its population, despite repeated calls from the international community to forsake nuclear ambitions for a better future.
North Korea and South Korea fought each other in the 1950-53 Korean War, which ended in a cease-fire, not a peace treaty. The two sides are still technically at war, and their border is one of most heavily fortified in the world.
"The surprise development raises concerns about its impact on Pyongyang's ongoing leadership transition, regime stability, and North Korean security and foreign policies," Bruce Klingner, senior researcher at the Heritage Foundation said.
He said North Korean provocative behavior or military action is unlikely in the near term.
"However, Seoul and Washington will be wary that Kim Jong-un, third son of Kim Jong-il and the next leader of North Korea, may feel it necessary in the future to precipitate a crisis to prove his mettle to other senior leaders or to generate a 'rally around the flag effect,'" he added.
South Korea's key stock index, the KOSPI, sank 3.43 percent, or 63.03 points, to close at 1,776.93. It dropped as low as 1,750 points right after news of Kim's death, but recovered to some degree on expectations that the impact on the local bourse could be short-lived.
Analysts said the North Korean leader's death, coupled with heightened geo-political risks, will boost uncertainty in the market, already dented by an ongoing Eurozone debt crisis and slowdown of the global economy.
South Korea's finance ministry and financial watchdog shifted into emergency mode in a bid to minimize fallout on local markets, officials said.
The Ministry of Strategy and Finance and the Financial Services Commission (FSC) set up 24-hour emergency teams to respond quickly to potential developments that could arise and fuel public and market concerns.
"Seoul is monitoring all changes, carefully analyzing their implications and what appropriate actions are needed to cope with the situation," Finance Minister Bahk Jae-wan said in a press release.
South Koreans expressed utter shock at the news.
Groups of people gathered in front of televisions in public places nationwide, with others glued to their hand-held smartphones as television broadcasters aired the breaking news.
"I am bewildered. I still can't believe it," Eom Yun-mo, a 38-year-old man, said as he waited for a train at Seoul Station. "Speculation over his death has circulated frequently, but this seems to be the first time his death has been confirmed."
He added, "I am worried there may be more turbulences than when Kim Il-sung died." (Yonhap)
Chronology of late North Korean leader Kim Jong-il
The following is a chronology of major events related to North Korean leader Kim Jong-il who died on Saturday of a massive heart attack, while on board a train during one of his field trips.
-- February 1941: Born at a secret military camp on Mount Paekdu in Yanggang Province.
-- July 1961: Joined the ruling Workers' Party of (North) Korea.
-- September 1973: Appointed as the party's secretary of organization and propaganda.
-- February 1974: Designated by his father and national founder Kim Il-sung as his successor.
-- April 1993: Elected as chairman of the National Defense Commission, the highest military decision-making body of North Korea.
-- July 1994: Took over leadership of North Korea upon Kim Il-sung's death.
-- May 2000: Visited China for the first time as the North Korean leader at the invitation of Chinese President Jiang Zemin.
-- August 2008: Collapsed from a stroke.
-- August 2011: Visited Russia's Far East and Russia.
-- December 17, 2011: Died during a train trip.