North and South Korean warships exchanged fire along a disputed sea border area off the west coast of the Korean Peninsular on Tuesday, just days before US President Barack Obama was due to embark on a crucial tour of Asia.
South Korean Navy patrol boats
The skirmish in the Yellow Sea – the first for seven years – left a North Korean patrol vessel "engulfed in flames" as it retreated back across the border under fire, according to the South Korean prime minister, Chung Un-Chan.
The clash came at a time when relations between the divided nations appeared to be thawing following increased tensions earlier this year caused by North Korea's decision to test a second nuclear device in defiance of UN sanctions.
South Korean analysts speculated that the apparent provocation by Pyongyang was an attempt to serve up a timely reminder of the volatility of the Korean Peninsular to Mr Obama who agreed on Monday to send an envoy to North Korea for direct talks.
Seoul said it had suffered no casualties from the exchange which took place after a South Korean patrol boat fired warning shots across the bow of the North Korean naval vessel that had crossed the disputed Northern Limit Line, 120 nautical miles west of Incheon.
"It wasn't a close-range battle. We fired heavily on the North Korean vessel," an unidentified navy official told South Korea's Yonhap news agency.
"It is our initial assessment that the North Korean boat suffered considerable damage."
South Korea's Joint Chiefs of Staff said in a statement that the North Korean patrol boat crossed the disputed western sea border around 11.27am (0227 GMT), drawing warning shots from a South Korean navy vessel after ignoring five warnings to turn back.
The North Korean boat then opened fire and the South's ship returned fire before the North's vessel sailed back toward its waters, the statement said.
North Korea's military, however, blamed South Korea, calling for it to apologise for a "grave armed provocation", and claiming that Seoul's ships had opened fire while its craft was still north of the disputed border.
The North added its boat "lost no time to deal a prompt retaliatory blow at the provokers".
North and South Korean navies fought deadly skirmishes along the western sea border in the Yellow Sea in 1999 and 2002, when six South Korean sailors were killed.
Last month the North's navy accused South Korea of sending warships across the border to stir tensions, warning that the "reckless military provocations" could trigger armed clashes.
North Korea has indicated it is prepared to return to stalled Six Party talks on its nuclear disarmament, but is seeking direct talks with the US as a precondition.
However in recent days Pyongyang announced it had produced more weapons-grade plutonium, in a move which analysts said was typical of the 'good-cop, bad-cop' diplomacy that the North uses to extract concessions from the international community.
"This might be an intentional clash aimed at heightening tension ahead of [President] Obama's trip," said Kim Yong-Hyun, a professor at Seoul's Dongguk University, "I believe North Korea is trying to show Obama the volatility of the peninsula."
A United Nations report published last month said that the North is feeling the severe impact of UN sanctions imposed last June after the second nuclear test, with some 8 million people, or a third of the population, suffering serious food shortages.
The South Korean won retreated on the news of the skirmish, however stock and bond markets held firm.
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