TOKYO/SEOUL (Reuters) - Diplomatic and economic measures taken to rein in North Korea’s missile program have not had the desired effect, a senior U.S. military commander said on Thursday after the North’s latest test triggered a flurry of calls among world leaders.

An underwater test-firing of a strategic submarine ballistic missile. KCNA via REUTERS

U.S President Donald Trump led calls with leaders and senior officials from Japan and South Korea on Thursday to discuss the latest provocation from Pyongyang, hours before Trump begins a much-anticipated summit with Chinese counterpart Xi Jinping.

“Up to this point I think it is fair to say ... that economic and diplomatic efforts have not supported the progress people have been anticipating and looking forward to,” U.S. Pacific Fleet Commander Admiral Scott Swift said in Tokyo, where he was meeting Japanese Self Defence Force commanders and foreign ministry officials.

North Korea’s nuclear and missile programs will be high on the agenda when Trump and Xi meet at Trump’s Mar-a-Lago resort in Florida later on Thursday, with anger in Beijing simmering over the deployment of an advanced U.S. anti-missile system in South Korea.

Analysts have said Wednesday’s launch of a ballistic missile from North Korea’s east coast probably took place with the Trump-Xi summit in mind as the reclusive state presses ahead in defiance of United Nations resolutions and sanctions.

In a phone call with Japanese Prime Minister Shinzo Abe on Thursday, Trump again said that all options were on the table when it came to North Korea’s continued missile tests.

Swift said a military response remained among those options.

“That decision would be up to the president,” he told reporters. “The military was always an option.”

Tensions on the Korean peninsula and the Trump-Xi summit began to worry markets on Thursday, with the dollar and Wall Street shares slipping.

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“The market is only starting to factor in recent developments regarding North Korea, and it now wants to figure out the geopolitical implications of the U.S.-China summit,” said Shusuke Yamada, a senior strategist at Bank of America Merrill Lynch in Tokyo.

“DANGEROUS PROVOCATION”

Abe said the two leaders had agreed that North Korea’s latest ballistic missile launch was “a dangerous provocation and a serious threat”.

He told reporters at his Tokyo residence he was watching to see how China would respond to Pyongyang after Xi meets Trump.

The White House said in a statement after the Abe call Trump “made clear that the United States would continue to strengthen its ability to deter and defend itself and its allies with the full range of its military capabilities”.

Trump has repeatedly said he wants China to do more to exert its economic influence over its unpredictable ally in Pyongyang to restrain its nuclear and missile programs, but China denies it has any overriding influence on North Korea.

On Sunday, Trump held out the possibility of using trade as a lever to secure Chinese cooperation, while suggesting Washington might deal with Pyongyang’s nuclear and missile programs on its own if need be.

Any launch of objects using ballistic missile technology is a violation of U.N. Security Council resolutions. The North has defied the ban, saying it infringes on its sovereign rights to self-defense and the pursuit of space exploration.

In another call on Thursday, Trump’s national security adviser H.R. McMaster told his South Korean counterpart that Washington remained committed to the deployment of the Terminal High Altitude Area Defense (THAAD) system in South Korea.

South Korea and the United States say the sole purpose of the THAAD system is to defend against missile launches from North Korea but China says the system’s powerful radar could penetrate into its territory.

The United States began deploying the first elements of the THAAD system in South Korea last month, despite angry opposition from China.

South Korean officials said McMaster discussed the North’s latest missile launch and the Trump-Xi summit in a call with his counterpart in Seoul, Kim Kwan-jin.

“Both sides agreed to pursue ... plans in order to substantially strengthen the international community’s sanctions and pressure on North Korea,” South Korea’s presidential Blue House said in a statement.

” ... both agreed to push forward the deployment of THAAD by U.S. forces in Korea,” it said.

U.S. officials said the missile launched on Wednesday appeared to be a liquid-fueled, extended-range Scud missile that only traveled a fraction of its range before spinning out of control.

They said it flew about 60 km (40 miles) from its launch site near Sinpo, a port city on the North’s east coast where a submarine base is located.

As well as a growing list of ballistic missile launches, North Korea has also conducted two nuclear weapons tests since January 2016. (For a graphic on North Korea's missile launches, see: tmsnrt.rs/2m9l4oj)

(This story has been refiled to correct spelling of Bank of America Merrill Lynch strategist’s first name to Shusuke in paragraph 10)