North Korea denies it sank South's navy ship

Salvage team members and rescue workers put a part of a sunken naval vessel on a barge after they lifted it with a giant crane, off Baengnyeongdo island near the maritime border with North Korea, northwest of Seoul April 15, 2010.

SEOUL (Reuters) - North Korea on Saturday denied that it sank a South Korean naval vessel near their disputed sea border late last month.

There has been growing speculation in the South that the ship had been hit by a North Korean torpedo, killing 46 sailors and raising fears it could trigger conflict on the divided peninsula.

The North's KCNA news agency accused the conservative government in Seoul of trying to foist blame on its reclusive neighbor to boost sagging support ahead of local elections in the South in June.

"The puppet military warmongers, right-wing conservative politicians and the group of other traitors in South Korea are now foolishly seeking to link the accident with the north at any cost," the North's KCNA news agency quoted an unnamed military commentator as saying.

"Another sinister aim sought by the puppet regime in floating the ... story is to justify the persistent and anachronistic policy toward the DPRK (North Korea) and shirk the blame for having driven the inter-Korean relations to the worst crisis."

South Korea, which has already brought some of the wreck to the surface, has said the blast that sank the vessel was caused by an external explosion.

Investigators from several countries, including the United States, are trying to determine what caused the 1,200-tonne Cheonan to split in half and plunge some 45 meters (148 feet).

South Korea's defense minister said this month it may have been hit by a torpedo, immediately thrusting suspicion on the North.

Local media has pinned the blame on North Korea in the absence of any other likely reasons, though official statements have been far more circumspect.

Few expect the South, worried about hurting its own economy in the midst of recovery, to risk taking military action against the North if investigations show Pyongyang sank the ship.

It is a delicate time for President Lee Myung-bak, whose relatively high ratings in opinion polls have dipped slightly following the sinking.

His defense minister and the military have come under some criticism for being slow over their handling of the issue.

Lee wants a strong showing in the June elections to give him the political muscle he needs to push through more reforms, which have been floundering in an unruly parliament, even though it is dominated by his ruling party.

Relations between the two Koreas have been chilly since Lee took office early in 2008, ending years of generous aid which had helped prop up the North's broken economy.

South Korea raised the stern of the ship on Friday and expects to bring the rest to the surface in the next few days, as it searches for clues to one if its deadliest naval disasters since the 1950-53 Korean War ended in a ceasefire.

The sinking could also complicate the resumption of stalled international talks on ending North Korea's atomic arms program in return for aid to prop up its broken economy, experts said.

(Additional reporting by Suh Kyungmin; Writing by Jonathan Thatcher; Editing by Bill Tarrant)