Italy has blocked the sale of two luxury yachts to North Korea because it suspects they were destined for Kim Jong-il, the country's ailing dictator, in a potential breach of international sanc-tions against Pyongyang.

A contract for the sale of the yachts, valued at about €12.5m ($17.8m), was terminated this month after an investigation by officials from the Italian ministry of economic development and the Guardia di Finanza, Italy's anti-fraud police, the Financial Times has learnt.