North Korea has seized a South Korean fishing boat off the peninsula's east coast, Seoul's coastguard said Sunday, amid high tensions between the two sides over a major naval exercise by the South.

The boat with four South Korean and three Chinese crewmen was detained while presumably operating near the North's exclusive economic zone in the Sea of Japan (East Sea), the coastguard said in a statement.

It was being towed Sunday to the North's northeastern port of Songjin.

"We urge North Korean authorities to handle this case in accordance with international norms and practices and return the ship and the crew at the earliest possible date," the coastguard said.

It was not immediately clear whether the 41-ton Daeseung 55 was suspected of illegal fishing.

The seizure was reported on the fourth day of the five-day exercise in the Yellow Sea on the other side of the peninsula. The drill has stirred anger and threats of retaliation from the North.

Cross-border relations have been stormy since South Korea and the United States, citing findings of a multinational investigation, accused the North of torpedoing a South Korean warship in March.

The North denies involvement in the sinking and has threatened retaliation for what it calls a provocative drill staged in response to the sinking.

The exercise, which involves 4,500 troops, 29 ships and 50 fighter jets, is one of a series planned in coming months -- some of them with South Korea's ally the United States -- in a show of strength against the North.

YTN television said the fishing boat sent a message at 11:00 am Sunday (0200 GMT) saying it was heading for Songjin.

The television quoted a Seoul government official as saying the boat had been operating in or near a fishing area jointly shared between Russia and North Korea, 270 kilometres (170 miles) east of the North's Musudan region.

The 41-ton vessel's home port is Pohang in the southeast of South Korea. It left port on August 1 and was scheduled to return on September 10, Yonhap news agency said.

The current naval drill follows a major joint South Korean-US naval and air exercise in the Sea of Japan late last month. That ended without incident despite the North's threats of military retaliation but earned a rebuke from China -- the North's staunchest ally and trade partner.

China staged a large naval and air exercise off its southeast coast at the same time as the joint US-South Korean drill.

Beijing had expressed concern about the US-South Korea exercise, which was initially supposed to be held in the Yellow Sea separating China and the Korean peninsula but was relocated to the Sea of Japan after Beijing's protests.

China has warned against further actions it says could raise tensions in the region.

As part of its own drill due to end Monday, the South's navy has staged intensive night-time exercises aimed at detecting North Korean submarines.

The navy came in for strong criticism for failing to detect the alleged submarine night attack on March 26 which split a corvette in two with the loss of 46 lives.

"The anti-submarine exercise... is a prelude to a war of aggression against the North," the newspaper of the North's ruling communist party, Rodong Sinmun, said Saturday.

In July last year a South Korean squid fishing boat, the Yeonan, accidentally crossed into North Korea's waters and was towed to a nearby port. It was released about a month later.

earlier related report
S.Korea holds second day of major anti-submarine drill
Seoul (AFP) Aug 6, 2010 - A major South Korean naval exercise designed to strengthen defences against North Korean attacks went into its second day Friday, as the communist North bristled over the drill.

The exercise is one of a series planned in coming months in response to what the South says was a deadly North Korean torpedo attack on a warship.

The South has mobilised 4,500 troops, backed by 29 ships and 50 aircraft, for its five-day drill in the Yellow Sea.

This week's manoeuvres do not include US forces, though last week South Korea and the United States staged a massive joint naval and air drill in the Sea of Japan (East Sea) as a show of force.

On Friday service personnel practised attacks on intruding craft and defences against submarines, the Joint Chiefs of Staff (JCS) said, along with a drill to repel attacks on coastline batteries and commando raids.

"Navy ships and marines, backed by jet fighters, repelled simulated attacks by North Korean commandoes," a JCS spokesman told AFP.

Pyongyang has angrily denied responsibility for the March sinking of the Cheonan warship near the disputed inter-Korean border in the Yellow Sea. The incident killed 46 sailors and sharply raised tensions.

The North on Thursday termed this week's drill a deliberate provocation and threatened "the most powerful" retaliation if the South triggers a conflict during the exercise.

"Our people and military will mercilessly crush the provokers and their stronghold with the most powerful war tactics and strike means beyond imagination if they ever dare to set a fire," said a statement from a state body called the Committee for Peaceful Reunification of the Fatherland.

But as of Friday morning no unusual movements by the North had been detected, a JCS spokesman told AFP.

A multinational investigation concluded in May that a North Korean submarine had torpedoed the warship.

Washington has announced new sanctions on the North to punish it for the alleged attack and to push it to scrap its nuclear weapons programme.

But the Obama administration on Thursday stopped short of putting Pyongyang back on a blacklist of countries supporting terrorism, despite pressure from lawmakers to do so.

Then-US president George W. Bush de-listed North Korea in 2008 after it vowed to end its nuclear programme, agreed to inspections by the International Atomic Energy Agency and pledged to disable its nuclear plants.

Despite the tense stand-off, South Korea has agreed to raise the minimum monthly wage for North Korean workers by 5 percent at a joint industrial estate just north of the border.

The increase, which came on Thursday, will be effective for one year starting August 1, the South's unification ministry said, adding the minimum wage for North Korean workers at Kaesong now stands at 60.775 dollars.

Kaesong is the last joint reconciliation project still operating, after relations worsened in recent years between the two Koreas.

About 44,000 North Koreans work for more than 120 South Korean companies producing goods such as textiles, footwear, watches and kitchenware.

The North has intermittently restricted cross-border access to Kaesong during times of tension. South Korea has halved the number of its nationals staying at the estate due to safety concerns since May.