SEOUL, South Korea -- Communist North Korea marked the 55th anniversary of its founding Tuesday with leader Kim Jong Il viewing a parade of soldiers and hundreds of thousands of civilians, but the celebration did not include a feared nuclear test.

The 61-year-old Kim raised his hand as column after column of goose-stepping soldiers paraded past the viewing stand.

Thousands of balloons were released into the air and thunderous cheers erupted as Kim -- who rules this country of 22 million and presides over the world's fifth-largest army of 1.1 million soldiers -- appeared on the podium for the ceremonies.

Video footage of the event showed Pyongyang's main plaza, named after Kim's late father, President Kim Il Sung, filled with men and women in colorful traditional dress.

The Soviet-backed Democratic People's Republic of Korea, or DPRK, was founded on Sept. 9, 1948, when the Korean peninsula was divided into communist and capitalist camps after the end of Japanese colonial rule.

Despite speculations that the anniversary would feature missiles and other military hardware, no sophisticated weapons were displayed during the two-hour parade.

"There were no missiles, tanks or other military hardware. It was all men, women and bands," said one Western observer in Pyongyang, who spoke on condition of anonymity.

South Korean newspapers had reported that up to 20,000 troops, 150 tanks and some of North Korea's vaunted missiles systems, including a new long-range ballistic missile, were to have been on display at the parade.

But the Western observer said only about 5,000 troops and 5,000 civilians took part in the main march. Later, hundreds of thousands of spectators joined in, marching behind the main body, waving the national flag, banners and portraits of the two Kims.

Tuesday's celebrations appeared to have eased tension on the Korean Peninsula over North Korea's suspected development of nuclear weapons.

The crisis erupted nearly one year ago when Washington said Pyongyang had acknowledged running a secret nuclear program in violation of international agreements. The two sides held talks last month along with Japan, China and Russia.

During the talks, the North Korean delegate, Kim Yong Il, warned that his country could test a nuclear weapon and prove that it had the means to deliver nuclear bombs.

"The DPRK will continue to increase its nuclear deterrent force as a means for just self-defense in order to defend the sovereignty of the country," said Kim Yong Chun, the North's military's chief of the general staff.

He accused the United States of keeping up its "hostile policy toward the DPRK despite the DPRK's good faith and magnanimity," Kim was quoted as saying by KCNA, the North's official news agency.

"North Korea's statements ... seem to be part of its tactics to gain leverage at the coming talks, and it seems to be working since there is a clear softening of stance from the United States," Koh Yu-hwan, a North Korea expert in Seoul, told The Associated Press.

North Korea wants Washington to sign a nonaggression treaty, open diplomatic ties and provide economic aid. The United States has demanded North Korea dismantle its nuclear program first before any concessions are offered. But last Thursday, a senior U.S. State Department official indicated the Bush administration might be a little more flexible. North Korea's covert program is believed to have produced at least one nuclear bomb.