North Korea says to strike South if drill goes ahead

SEOUL/BEIJING (Reuters) - North Korea said on Friday it would strike again at the South if a live-fire drill by Seoul on a disputed island went ahead, with an even stronger response than last month's shelling that killed four people.

North Korean official news agency KCNA issued the threat as South Korea prepared for firing drills on Yeonpyeong island near a disputed maritime border with the North for the first time since November's exchange of artillery fire.

"The strike will play out a more serious situation than on November 23 in terms of the strength and scope of the strike," KCNA said.

A leading South Korean defense analyst said he doubted the North would carry out its threat, which rattled financial markets, and South Korea's Defense Ministry said the exercise planned for December 18-21 would go ahead.

The North had said its November shelling was a response to South Korean "provocations" after an artillery battery on the island fired in what Seoul said was a routine drill.

North Korea's warning came after Seoul promised a more robust response to any further attacks on its territory. The shelling of the island was the first time since the Korean War that North Korea had attacked South Korean territory.

"They would have to be committing to a full-out war if they did that (struck again)," said Baek Seung-joo of the Korea Institute for Defense Analyses, an expert on North Korea's military strategy.

"What's likely is they will do something as a face-saving action, such as firing their own artillery near the disputed waters," he said.

The Korean won currency fell slightly in offshore forward trading against the dollar, with the 1-month non-deliverable dollar/won forwards rising to as high as 1,159 soon after the news broke from around 1,155.

CHINA URGES U.S. TO PLAY CONSTRUCTIVE ROLE

China, the North's main backer, has said Pyongyang had promised restraint. China told visiting U.S. Deputy Secretary of State James Steinberg the two big powers should cooperate more in defusing tension on the Korean Peninsula.

U.S. diplomatic troubleshooter Bill Richardson is visiting Pyongyang in an effort to "reduce the tension on the Korean Peninsula.

China's top diplomat, Dai Bingguo, urged closer coordination over the Korean Peninsula during talks with Steinberg, the second most senior official in the U.S. State Department, the state-run Xinhua news agency reported on Friday.

Steinberg was in Beijing for three days till Friday to press China to rein in North Korea, which as well as shelling the island last month also disclosed advances in uranium enrichment that could give it a new path to making nuclear weapons.

China has avoided publicly condemning its long-time ally over the shelling and nuclear program, and instead pleaded with other powers to embrace fresh talks with North Korea.

Russia summoned the ambassadors of South Korea and the United States to express "extreme concern" and urged the two countries to halt the exercise to prevent "the further escalation of tensions," the Russian Foreign Ministry said.

The ministry said in a statement that U.S. military officers were to observe the South Korean exercise.

"North Korea was called upon to display maximum restraint," the Russian statement added.

The U.S. State Department underscored the U.S. stance that South Korea had every right to conduct the exercises, but indicated that it, too, was worried.

"We are absolutely concerned about the current trajectory," State Department spokesman P.J. Crowley said, adding that Pyongyang was responsible for raising the tensions.

"We trust that South Korea will be very cautious in terms of what it does, but that said, let's put the responsibility squarely where it lies," he said.

SEEKING NEGOTIATIONS

North Korea is seeking the restart of six-party nuclear talks with the United States, China, South Korea, Japan and Russia.

It wants the talks to resume without preconditions, something Washington and South Korea have ruled out because they do not want to reward Pyongyang for hostile actions.

Analysts say the North uses the threat of attacks and even nuclear conflict to win concessions such as food and economic aid at talks over its nuclear stockpile.

At the same time as the poor, reclusive country is pushing for aid, the North is also in the throes of a potential leadership succession as ailing leader Kim Jong-il grooms his youngest son, Kim Jong-un, as the next ruler.

(Additional reporting by Jack Kim, and Steve Gutterman and Alissa de Carbonnel in Moscow; Andrew Quinn in Washington; writing by David Chance; editing by Andrew Marshall, Jon Hemming and Mohammad Zargham)