By David Brunnstrom and Matt Spetalnick

WASHINGTON (Reuters) – U.S. President Donald Trump on Thursday called off a planned historic summit with North Korean leader Kim Jong Un, even after North Korea followed through on a pledge to blow up tunnels at its nuclear test site.

Referring to a scheduled June 12 meeting with Kim in Singapore, Trump said in a letter to the North Korean leader: “Sadly, based on the tremendous anger and open hostility displayed in your most recent statement, I feel it would be inappropriate, at this time, to have this long- planned meeting.”

Trump called it “a missed opportunity” and said he still hoped to meet Kim someday.

The North Korean mission to the United Nations did not immediately respond to a request for comment on Trump’s cancellation of the summit.

U.S. stocks dropped sharply on the news, with the benchmark S&P 500 Index falling more than half a percent in about 10 minutes. Investors turned to U.S. Treasury debt as a safe alternative, driving the yield on the 10-year note, which moves inversely to its price, down to a 10-day low and back below the psychologically important 3 percent level.

The U.S. dollar also weakened broadly, particularly against the Japanese yen, which climbed to a two-week high against the greenback.

“Please let this letter serve to represent that the Singapore summit, for the good of both parties, but to the detriment of the world, will not take place,” Trump wrote.

“You talk about your nuclear capabilities, but ours are so massive and powerful that I pray to God that they will never have to be used,” he said.

Earlier on Thursday, North Korea repeated a threat to pull out of the summit with Trump next month and warned it was prepared for a nuclear showdown with Washington if necessary.

FADED HOPE

North Korea’s pursuit of nuclear weapons has been a source of tension on the Korean peninsula for decades, as well as antagonism with Washington. The rhetoric reached new heights under Trump as he mocked Kim as “little rocket man” and in address at the United Nations threatened to “totally destroy” North Korea if necessary. Kim had called Trump mentally deranged and threatened to “tame” him with fire.

Kim rarely leaves North Korea and his willingness to meet and Trump’s acceptance sparked hope but it had faded in recent days.

In a statement released by North Korean media, Vice Foreign Minister Choe Son Hui had called U.S. Vice President Mike Pence a “political dummy” for comparing North Korea – a “nuclear weapons state” – to Libya, where Muammar Gaddafi gave up his unfinished nuclear development program, only to be later killed by NATO-backed fighters.

“Whether the U.S. will meet us at a meeting room or encounter us at nuclear-to-nuclear showdown is entirely dependent upon the decision and behavior of the United States,” Choe said.

A small group of international media selected by North Korea witnessed the demolition of tunnels at the Punggye-ri site on Thursday, which Pyongyang says is proof of its commitment to end nuclear testing.

The apparent destruction of what North Korea says is its only nuclear test site has been widely welcomed as a positive, if largely symbolic, step toward resolving tension over its weapons. North Korean leader Kim has declared his nuclear force complete, amid speculation the site was obsolete anyway.

Cancellation of what would have been the first ever summit between a serving U.S president and a North Korean leader denies Trump what supporters hoped could have been the biggest diplomatic achievement of his presidency, and one worthy of a Nobel Prize.

“I felt a wonderful dialogue was building between you and me, and ultimately it is only that dialogue that matters,” Trump said in his letter to Kim. “Some day, I look very much forward to meeting you.”

(Reporting by Joyce Lee; additional reporting by Ben Blanchard in Beijing and Hyonhee Shin in Seoul; Writing by Josh Smith and Doina Chiacu; Editing by Robert Birsel and Bill Trott)