North Korea announced the death of supreme leader Kim Jong-il and urged its people Monday to rally behind his young son and heir-apparent, while the world watched for signs of instability in a nation pursuing nuclear weapons.

South Korea launched a high alert for its military as it faces the North's 1.2 million-strong armed forces, while U.S. President Barack Obama and South Korean President Lee Myung-bak agreed by phone to closely monitor the events and co-operate.

People on the streets of the North Korean capital, Pyongyang, broke into tears as they learned the news that their "Dear Leader" had died at the age 69 of heart failure Saturday while carrying out official duties on a train trip.

"He passed away too suddenly to our profound regret," said a statement carried by the North's official Korean Central News Agency. "The heart of Kim Jong-il stopped beating, but his noble and august name and benevolent image will always be remembered by our army and people."

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Kim Jong-un, son of the late North Korea leader Kim Jong-il, seen in this 2010 file photo, is expected to take power in the communist nation. (Vincent Yu/Associated Press/File)

While there was no immediate statement on official succession, there were clear indications that Kim's 20-something son, Kim Jong-un, would be in charge.

The North said in a dispatch that the people and the military "have pledged to uphold the leadership of comrade Kim Jong-un" and called him a "great successor" of the country's revolutionary philosophy of juche, or self reliance.

"At the leadership of comrade Kim Jong-un, we have to change sadness to strength and courage and overcome today's difficulties," North Korea said.

It was not immediately clear what effect Kim's death would have on recent efforts to bring North Korea back into nuclear talks aimed at exchanging aid for commitments by the North to disarm.

South Koreans officials expressed concern over the news — parliamentary official Lee Kyu-yun said he was thinking of stocking up food in case of soaring military tensions — while one analyst said Kim's death was unlikely to plunge the country into chaos because it already was preparing for a transition.

Many South Koreans, however, got the news of Kim Jong-il's death at lunch time, and they appeared little affected by the announcement.

"It will have virtually no impact on the lives of the South Korean people," freelance journalist Jason Strother told CBC News. There may be some uncertainty, "but no one is rushing to buy tickets to leave the country."

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A tearful announcer dressed in black announces the death of North Korean leader Kim Jong-il on North Korean state television on Monday. (Reuters/KRT via Reuters TV)

"There won't be any emergencies in the North at least in the next few months," said Baek Seung-joo of the state-run Korea Institute for Defence Analyses in South Korea.

In a tweet late Sunday, Jason Kenney, Canada's minister of citizenship, immigration and multiculturalism, said: "Let us hope that the North Korean people will soon be freed from the Communist prison in which they have been captive for six decades."

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Kim Jong-il unveiled his third son, Kim Jong-un, as his successor a year ago, putting him in high-ranking posts. Little is known about the younger Kim, who is believed to be in his 20s.

Kim Jong-un regularly accompanied his father on trips around the country over the past year. Kim Jong-il inherited power after his father, revered North Korean founder Kim Il Sung, died in 1994.

The North said it would place Kim's body in the Kumsusan memorial palace in Pyongyang and would hold a national mourning period until Dec. 29, when "all the people in the nation (will) spend three minutes in silent prayer."

Kim's funeral will be held on Dec. 28, it said, adding that all entertainment would be banned during the mourning period and that the country would accept no "foreign delegations hoping to express condolences."

South Korea's police were placed on a high alert after Kim's death, according to the National Police Agency, and the South Korean parliament convened emergency committee sessions on national defence, intelligence and unification affairs. South Korean President Lee put the military on alert and convened a national security council meeting.

The South Korean and U.S. militaries have bolstered reconnaissance and are sharing intelligence assets on North Korea, according to Seoul's Defence Ministry. About 28,500 U.S. troops are stationed in South Korea.

Lee urged the nation to remain calm in its daily economic activities, according to the presidential Blue House. During an emergency security meeting, he also ordered closer co-operation with the international community to maintain peace and stability in the region.

The White House said in a statement that it is closely monitoring reports of Kim's death.

"The president has been notified, and we are in close touch with our allies in South Korea and Japan. We remain committed to stability on the Korean peninsula, and to the freedom and security of our allies," the statement said.

The Obama administration may postpone decisions on re-engaging the North in nuclear talks and providing it with food aid, U.S. officials said.

The administration had been expected to decide on both issues this week, possibly as early as Monday, but the officials said Kim's death would likely delay the process. The officials spoke on condition of anonymity due to the sensitivity of the situation. They said the U.S. was particularly concerned about any changes that Kim's death might spark in the military postures of North and South Korea but were hopeful that calm would prevail.

In a "special broadcast" Monday from the North Korean capital, state media said Kim died on a train due to a "great mental and physical strain" on Dec. 17 during a "high intensity field inspection." It said an autopsy was done on Dec. 18 and "fully confirmed" the diagnosis.

Kim is believed to have suffered a stroke in 2008, but he had appeared relatively vigorous in photos and video from recent trips to China and Russia and in numerous trips around the country carefully documented by state media.

"It is the biggest loss for the party … and it is our people and nation's biggest sadness," an anchorwoman clad in black Korean traditional dress said in a voice choked with tears.

Asian stock markets moved lower amid the news, which raises the possibility of increased instability on the divided Korean peninsula.

South Korea's Kospi index was down 3.9 per cent at 1,767.89 and Japan's Nikkei 225 index fell 0.8 per cent to 8,331.00. Hong Kong's Hang Seng slipped two per cent to 17,929.66 and the Shanghai Composite Index dropped two per cent to 2,178.75.

Chae Jae-eun, a South Korean company worker, said from Seoul that she worried mostly about the economic implications of Kim Jong-il's death. She also said North Korea now stands at a crossroads as the country may isolate itself further or open up.

A group of North Koreans waiting at Beijing airport for their flight to Pyongyang reacted with shock when asked of Kim's death. One woman broke into tears as she pulled out a handkerchief. One of her companions led her away when she looked as if she would collapse.

Another man muttered, "I can't believe it. I can't believe it. This can't be true. We were at the embassy this morning and surely they would have known about this news."

He composed himself and said I won't believe it until I hear it from my own state media.

Traffic in the North Korean capital was moving as usual Monday. A foreigner contacted at Pyongyang's Koryo Hotel said hotel staff were in tears.