The death of Kim Jong-il threw the Korean peninsula into fresh uncertainty on Monday as the North Korean regime named the dictator’s youngest son as the “Great Successor”, rattling financial markets in the south.

In a solemn broadcast, a North Korean television newscaster announced that Kim Jong-eun would assume power after his 70-year-old father died of a heart attack on Saturday while travelling outside Pyongyang by train.

“He worked day and night for socialist construction and the happiness of people, for the union of country and modernisation. He left us so suddenly,” said the teary-eyed newscaster.

Kim Jong-il’s death rids the world of one of its most ruthless leaders, a man who focused on turning the totalitarian state into a nuclear-armed power while starving millions of his people to death. But the ascension of his inexperienced son, reported to be no more than 28 years of age, could threaten the stability of east Asia as the scion of the Kim dynasty may struggle to rule a country buckling under the weight of sanctions, hunger and power cuts.

South Korea put its military on an emergency footing, while Japan put its coast guard on higher alert. Yoshihiko Noda, Japan’s prime minister, said it was important to “ensure that the situation does not have a negative effect on peace and stability on the Korean peninsula”.

China, which is North Korea’s closest ally, said it was sure the North Korean people would “unify around the Korean Workers’ Party, and under the leadership of Comrade Kim Jong-eun, turn their anguish into strength”.

In Washington, the White House said the US remained “committed to stability on the Korean peninsula”.

Kim Jong-il, who was known for his love of rich food and alcohol, had been visibly frail since suffering a suspected stroke in 2008. Last year, he designated his son as his successor, making him a four-star general even though Kim Jong-eun, who reportedly studied in Switzerland, had never served in the military.

Kim Jong-eun faces the challenge of holding together a highly militarised state. It is unclear whether he has been able to solidify support in the short time since he was anointed successor. Kim Jong-il had much more time to prepare before his father Kim Il-sung, North Korea's founder, died in 1994.

“The young man will not take office with the same authority his father had,” said Stephen Bosworth, who was the US envoy for North Korea policy until October.

South Korean media reported that North Korea on Monday also tested a short-range missile, something that Pyongyang has done repeatedly in recent years. It was unclear whether the launch was connected with Kim’s death.

North Korean media on Monday dubbed the young Kim the “Great Successor”, following in the footsteps of Kim Jong-il who was known “Dear Leader”. Kim Il-sung, North Korea’s founder, was known as the “Great Leader”.

Kim Jong-il’s age was unclear. Russian records say he was born in Siberia in 1941. But, North Korea insists he was born one year later on Mount Baekdu, the mythological crucible of Korean civilisation. Experts say North Korea put his birth a year later to suggest a harmony in being born 30 years after his father, Kim Il-sung.

During his illness, Kim promoted his younger sister, Kim Kyong-hui, and her husband, Chang Sung-taek, to positions where they could oversee the succession of Jong-eun. Political analysts say their role will prove decisive in ensuring a smooth transfer of power in Pyongyang.

Brian Myers, an expert in North Korean ideology at Dongseo university, said it would be unthinkable for commanders from outside the family to seize control because the whole state was founded on the continuity of the Kim bloodline.

The greater danger for instability in the region is that rival North Korean generals and Workers’ party officials will jostle for positions where they can use Kim Jong-eun as a figurehead for their own ambitions, analysts argue.

South Korea has consistently identified the death of Kim Jong-il as an event that could accelerate the unification of the peninsula, which has been divided since 1945. Shares on Seoul’s Kospi index closed down 3.4 per cent.

“Investors were rattled by the news because they are not sure about what will happen in North Korea after his death,” said Lee Sang-won at Hyundai Securities.

Additional reporting by Geoff Dyer in Washington, Jonathan Soble in Tokyo, Robin Kwong in Taipei and James Blitz in London

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