Koreas exchange fire near sea border, markets drop

SEOUL, (Reuters) – North and South Korea last night exchanged what appeared to be artillery fire near a  disputed sea border with the South off the west coast of the  peninsula, Yonhap news agency reported government officials as  saying.

South Korea’s presidential Blue House said both sides were  firing into the air and there were no casualties, according to  Yonhap. It has called a meeting of top national security  officials.

The rare exchange of fire rattled markets, with Seoul’s  main stock exchange extending losses and the won wiping out  early gains against the dollar.

North Korea yesterday declared a no-sail zone in the  Yellow Sea waters in a sign that it might fire artillery or  short-range missiles, media reports said.

South Korea’s office of the Joint Chiefs of Staff could not  immediately confirm the reports.

The area is near a contested sea border between the rival  Koreas that was the site of a brief naval clash in November  between the states, which are technically still at war.

A South Korean ship was pockmarked with bullet holes and a  North Korean vessel limped back to port in flames after that  fire fight.

About a month before that clash, North Korea raised  regional security concerns by firing short-range missiles off  its east coast.

Destitute North Korea in recent weeks has signalled that it  is ready to reduce the security threat it poses in North Asia  by saying it could end its year-long boycott of international  nuclear disarmament talks.

Analysts said the latest moves may be an attempt by  Pyongyang to increase its leverage and win concessions to lure  it back to the table in the disarmament-for-aid talks among the  two Koreas, China, Japan, Russia and the United States.