North Korea says US -South Korea drills bring war closer

PAJU, South Korea (Reuters) - North Korea said on Friday that impending military exercises by the South and the United States were pushing the region towards war, days after it launched its heaviest bombardment since the 1950-53 Korean War.

North Korean shells rained down on the small South Korean island of Yeonpyeong on Tuesday, killing four people and destroying dozens of houses. The North said it was responding to live fire from the South into its waters.

“The situation on the Korean peninsula is inching closer to the brink of war due to the reckless plan of those trigger-happy elements to stage again war exercises targeted against the (North),” the North’s official KCNA news agency said.

“...The army and people of the DPRK (North Korea) are now greatly enraged at the provocation of the puppet group (South Korea) while getting fully ready to give a shower of dreadful fire and blow up the bulwark of the enemies if they dare to encroach again upon the DPRK’s dignity and sovereignty even in the least.”

The aggressive language is typical of North Korean state-owned media, but the heightened tension was enough to depress the won as much as 2.2 percent. The stock market closed 1.3 percent down, in line with the wider region.

There was brief panic in the capital Seoul in the afternoon when television reported sounds of artillery fire near Yeonpyeong. But the military said the artillery fire was distant and no shells landed in South Korea. It appeared to be a North Korean drill.

“Investors are growing more jittery ahead of the joint military exercise,” said Kim Hyoung-ryoul, a market analyst at NH Investment & Securities. “The key concern is, whether North Korea will again take unforeseen, rash actions.”

South Korean media said President Lee Myung-bak would name a career military man to replace the defence minister, who resigned after criticism that the government was too slow to respond to Tuesday’s shelling. The government said it was still deciding.

The United States is sending in an aircraft carrier group led by the nuclear-powered USS George Washington to the Yellow Sea for the military exercises with South Korea starting on Sunday.

Planned before this week’s attack, the four-day manoeuvres are a show of strength which, besides enraging North Korea, have already unsettled China, its neighbour and major ally.

Washington is pressing China to rein in its ally North Korea to help ease tension in the world’s fastest-growing economic region.