* New tension over North Korean charges
* Pyongyang does not recognise sea border set after war
(Adds details, quotes)
By Jon Herskovitz
SEOUL, Oct 15 North Korea accused the South on Thursday of intruding into its territorial waters, further raising tension on the peninsula already heightened by the North's launch this week of a barrage of short-range missiles.
The allegations and a threat to attack the South's ships add a new facet to mixed messages coming out of the North in recent days. These also include moves to defuse tensions by reaching out to foes South Korea and the United States for discussions.
"The reckless military provocations by warships of the South Korean navy have created such a serious situation that a naval clash may break out between the two sides in these waters," the North's KCNA news agency quoted a military official as saying.
Analysts said the North may be trying to show that it is willing to raise the stakes to increase its bargaining leverage with Seoul and regional powers. [ID:nSEO306973]
"They don't want to come to the negotiating table looking weak," said Cho Myung-chul, a former academic in North Korea who defected to the South and is now an analyst at the Korea Institute for International Economic Policy.
The two Koreas have fought two deadly naval battles in disputed waters off the west coast of the peninsula in the past 10 years.
The North has dismissed as invalid a sea border called the Northern Limit Line (NLL), set unilaterally by U.S.-led U.N. forces at the end of the 1950-53 Korean War.
An official with the South's Joint Chiefs of Staff said the North's charge was groundless and it was accusing the South's vessels of crossing a line in the sea that Seoul does not observe. That line was set by Pyongyang, well south of the NLL.
Investors in Asia's fourth largest economy have grown used to the North's military moves that included the launch of five short range missiles on Monday and reports in South Korean media that the hermit state may soon shoot off more rockets. [ID:nSEO324330].
A day before issuing the threat to attack the South's ships, North Korea made a rare statement of contrition in talks with the South when it expressed regret over releasing water from a dam last month on a river that flows to the South. That caused a flood that killed six southerners. [ID:nSP69539]
North Korean leader Kim Jong-il last week said Pyongyang was ready to return to dormant six-country talks on ending its nuclear arms programme, though he called for direct discussions with the United States before his country could head back. [ID:nSP478096] (Additional reporting by Christine Kim; Editing by Ken Wills and Ron Popeski)