Seoul has also rejected separate talks requested by North Korea aimed at easing tension on their border, in the first such move since they began to reconcile in 2000.
North Korea, one of the world's most isolated and impoverished nations, has repeatedly expressed anger over sanctions against it and Friday called on Japan to lift its unilateral punitive measures.
"We said that we would take stronger physical actions, should criticism against [North Korea] become even stronger. That comment was made with Japan in mind," warned the North's envoy to talks on normalization of diplomatic relations with Japan, Song Il-Ho, Japanese public broadcaster NHK reported.
"Japan occupied Korea with its military 40 years ago, but settlement for that past has not yet been finished," NHK quoted Song as saying, lambasting Tokyo's demand for multilateral sanctions as "preposterous."
"It was extremely regrettable and we feel resentment," Japanese Chief Cabinet Secretary Shinzo Abe said.
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