North Korea reacted angrily to South Korean naval exercises close to its border by scrapping a maritime agreement designed to prevent accidental naval clashes.

North Korea will "completely nullify" an agreement that has both navies using a common communication wavelength for some messages, a statement in the government-owned Korean Central News Agency said.

The government in Pyongyang "will completely stop using international maritime ultra-short wave walkie-talkies and will immediately cut off the communication line that was opened to handle an emergency situation."

The KCNA article also warned that North Korea would immediately attack any South Korean naval ship found inside its territorial waters in the Yellow Sea, although the exact maritime border remains in dispute.

Threats by both sides come after an international investigation team concluded that it was a North Korean torpedo that sank the 1,200-ton South Korean Cheonan in the Yellow Sea on March 26, killing 46 sailors.

North Korea consistently denied that one of its navy submarines sank the Cheonan.

South Korea responded to the investigators' report by threatening to take the issue to the U.N. Security Council in a move to increase international sanctions against the North.

South Korea reportedly began naval exercises this week with U.S. Navy participation. At least 10 ships, including a 3,000-ton destroyer, are taking part. Artillery and anti-submarine bombs have been tested as part of the exercise designed to detect submarines.

The North Korean article denounced the naval exercise by "the puppet forces" of South Korea and ships from "the U.S. imperialist aggressor" forces.

The latest outburst by North Korea's media raised tensions further between the two Koreas still officially at war since the Korean conflict ended in 1953 with only a cease-fire and not a peace treaty.

The sinking of the Cheonan is a setback for inter-Korea relations that had been showing signs of improvement, despite issues over the North's nuclear program.

But South Korea has begun withdrawing its personnel from the Kaesong Industrial Region, a joint North and South economic project set up in 2002.

Kaesong is within North Korea and about 6 miles from the demilitarized zone separating two countries. It has direct rail access to the South and is about an hour's drive from the South Korean capital Seoul.

Both Koreas benefit from the trade with the cash-strapped North gaining more than $33 million year. About 100 South Korean companies are based in the Kaesong region and employ 40,000 North Koreans.

In retaliation, North Korea banned South Korean ships and planes from entering its maritime and airspace, effectively freezing trade with the South.

South Korea has received backing from many countries, including the United States, Japan and the European Union.

This week U.S. Secretary of State Hillary Clinton, speaking in Seoul, called for more international action against the north over the Cheonan incident.

She called on Pyongyang to stop its "policy of belligerence." The sinking was "an unacceptable provocation by North Korea and the international community has a responsibility and a duty to respond."

China, North Korea's main ally, has neither openly criticized Pyongyang nor accepted the investigators' report on the Cheonan. However, an editorial in Beijing's Global Times newspaper appears to indicate that China may be losing patience with North Korea's belligerent attitude.

"It is time for Pyongyang to convince a skeptical world with solid evidence, as Seoul has already presented its evidence," the editorial said.

"A cold reality confronting Pyongyang now is that South Korea has presented evidence so overwhelming that it has gained full support from the United States and Japan and dominated worldwide public opinion on this issue.

"In contrast, North Korea has merely thrown in strong verbiage along with the threat of an all-out war. Its reaction will by no means help Pyongyang get out of the current predicament."

earlier related report
N.Korea rejects evidence over sinking of S. Korean ship
Seoul (AFP) May 29, 2010 - North Korea has flatly rejected evidence showing it torpedoed a South Korean warship with the loss of 46 lives, saying it does not even own a midget submarine allegedly used for the March attack.

The North's powerful National Defence Commission (NDC), chaired by leader Kim Jong-Il, held a rare press conference on Friday and denied Pyongyang's involvement, according to official North Korean media.

Major General Pak Rim Su, director of the policy department of the NDC, said the North does not have a 130-tonne "Yeono (salmon)-class" submarine, which the South says torpedoed its 1,200-ton corvette, the Cheonan, in the Yellow Sea.

"We don't have anything like a 130-tonne Yeono-class submersible," Pak was quoted by Pyongyang's Chungang TV as telling reporters.

A multinational investigation led by Seoul concluded earlier this month that the March 26 sinking was caused by a torpedo attack from the North.

South Korean investigators said a Yeono class midget submarine had intruded into South Korean waters via international waters.

But Pak said: "It does not make any sense militarily that a 130-tonne submersible carrying a heavy 1.7-tonne torpedo travelled through the open sea into the South, sank the ship and returned home."

But South Korea's Yonhap news agency quoted South Korean officials as saying the North's submarine fleet includes around 10 Yeono class submarines.

Pak also rebutted Seoul's allegation that salvaged fragments of the torpedo matched design specifications that appeared on brochures the North allegedly sent to an unidentified potential buyer of North Korean torpedoes.

"Who in the world would hand over torpedo designs while selling torpedoes?" he said.

But Yonhap quoted an unidentified senior government official as saying that the South got hold of brochures sent by a North Korean state-run trading company to a potential weapons buyer that contain design specifications of three types of torpedoes.

Senior Colonel Ri Son Gwon dismissed as a "fabrication" a serial number hand-written on a torpedo fragment reading "1 bun" or number one.

South Korea said the serial number handwritten in Korean was strong evidence of Pyongyang's involvement in the sinking.

"When we put serial numbers on weapons, we engrave them with machines," Ri said. "We use 'bun' only for football or basketball players," he said.

But South Korean investigators said the North also uses "bun" for numbering things to be assembled, attributing the information to defectors from North Korea.

Pak said the Seoul-led multinational team was not in a position to conduct an objective probe and attacked Seoul for rejecting Pyongyang's demand to allow its own experts to investigate the cause of the sinking.