North Korea marked the anniversary of its late founder's birthday Thursday, following mass promotions for military top brass and a firework and light display in honour of the ruling dynasty.

Official media in the communist state have reported a festive mood for the "Day of the Sun", which marks the birth of Kim Il-Sung, who died in 1994.

The anniversary comes against a backdrop of deadlock in nuclear disarmament negotiations and rising tensions with South Korea, following the unexplained sinking of a South Korean warship near the disputed border.

The late Kim, who is still styled "Eternal President" at his mausoleum, instituted the world's first ever system of dynastic communist rule when he handed over power to his son Kim Jong-Il.

North Koreans on Thursday visited the Kumsusan Memorial Palace where Kim Il-Sung's embalmed body lies under a glass coffin and laid wreaths at statues honouring him nationwide, the Korean Central News Agency (KCNA) said.

"They paid homage to the president, a peerless patriot, peerlessly great man and benevolent father of the nation, in profound reverence," the agency said.

Crowds also lined the banks of Pyongyang's Taedong River Wednesday evening to watch a firework and light display marking the anniversary.

"Kaleidoscopic fireworks and a variety of rays turned the nocturnal sky as bright as day," KCNA said.

Electronic signs reading "General Kim Il-Sung Is Our Sun" and "We Will Live Forever with the President" were displayed in the middle of the river.

The display demonstrated the desire of the army and people to "single-mindedly" rally around current leader Kim Jong-Il, it added.

On Wednesday Kim -- like his late father the subject of an intense personalty cult -- handed out anniversary promotions to 92 general-level officers.

It was the largest such exercise since 1997, when he upgraded 129 generals, strengthening his grip on the powerful 1.2 million-strong military.

The North still suffers persistent food shortages, worsened by a bungled currency revaluation last November that sparked rare unrest in the tightly controlled state.

South Korea's Chosun Ilbo newspaper said the impoverished North imported more than 200 vehicles from China last week and this week.

They included compact cars, which the paper said were probably intended as gifts for mid-level officials to ensure their loyalty. The cars were pictured being driven across the Yalu river Tuesday, two days before the anniversary.

Kim attended a major military exercise to mark the Day of the Sun, official media said Wednesday, without giving the date of the drill.

The South's defence ministry says more displays of firepower are planned this month.

Activists in the South floated 100,000 leaflets across the border excoriating the Pyongyang regime on Thursday. Huge plastic balloons, one of them inscribed "Down with Kim Jong-Il", carried the leaflets across the tightly guarded border.

Some 200 DVDs, with footage about South Korea and the outside world, and 200 tiny radios were also attached. US dollar bills were added to the packages to encourage North Koreans to pick up the flyers despite the risk of punishment.