China and the United States said Tuesday they would work together on the crisis brewing in the Korean peninsula, agreeing after two days of key talks that ensuring regional stability was crucial.

The statement came at a time of rising tensions between North and South Korea, after a team of international investigators concluded that Pyongyang was to blame for the deadly sinking of a South Korean warship in March.

US Secretary of State Hillary Clinton said Washington would work with China and others to "fashion an effective and appropriate response" to the crisis, but Beijing has so far refused to even condemn Pyongyang over the incident.

The support of China, a veto-wielding member of the UN Security Council and the North's only major ally, is seen as crucial for any international punitive action targeting Pyongyang over the incident, which left 46 sailors dead.

"We are ready to work together with the US and other parties and continue to stay in close touch on the situation on the Korean peninsula," Vice Foreign Minister Cui Tiankai told reporters.

"The two sides believe that ensuring peace and stability in east Asia and the Korean peninsula is critical," State Councillor Dai Bingguo said at a joint press appearance with key US officials including Clinton.

"Relevant parties should proceed on the basis of safeguarding the overall interest of peace and stability in the region and calmly and appropriately handle the issue and avoid escalation of the situation."

Clinton echoed Dai's comment, saying Washington and Beijing "share the objective of peace and stability on the Korean peninsula."

"Now we must work together again to address the serious challenge provoked by the sinking of the South Korean ship," she said.

North Korea on Tuesday accused South Korea's navy of trespassing in its waters and threatened military action, further ratcheting up tensions after the South cut off all trade with Pyongyang the day before.

Seoul also has pledged to take the matter before the UN Security Council.

The United States, Japan, Britain and Australia have all strongly condemned the North, which has denied all involvement.

But Beijing has so far urged restraint from all parties involved in the crisis and called for dialogue, not confrontation.

Foreign ministry spokeswoman Jiang Yu also said that China would not tolerate any actions that would disturb peace in the region.

"We sincerely hope that all parties concerned stay calm and exercise restraint," Jiang told reporters.

"We believe dialogue is better than confrontation."

Senior Chinese envoy Wu Dawei visited Seoul on Tuesday for talks with Foreign Minister Yu Myung-Hwan, who is mounting an intensive diplomatic drive to secure international support in the crisis.

Chinese Premier Wen Jiabao is also due in South Korea Friday, where he will take part in a three-nation summit with South Korean President Lee Myung-Bak and Japanese Prime Minister Yukio Hatoyama likely to focus on Korean tensions.

Clinton has been pressing Seoul's case with Chinese officials in Beijing during the two days of high-level Sino-US meetings.

Earlier this month, China gave a red-carpet welcome to North Korean leader Kim Jong-Il for a four-day visit -- his first outside his country in four years.

Beijing provides Pyongyang with most of its food and fuel.