South Korea, North Korea | featured news

A North Korean envoy warned on Thursday that war could erupt at any time on the divided Korean peninsula because of tension with Seoul over the sinking of a South Korean warship in March.

China deflected pressure to censure North Korea at a regional summit on Sunday, instead urging its neighbors to calm tensions over the sinking of a warship and avoid any clash that could shake Asia.

North Korea reacted to a South Korean anti-submarine exercise early Thursday by saying it would meet "confrontation with confrontation" and war with "all-out war," according to North Korean state-run media.

The Dow Jones industrials plunged below 10,000 Tuesday after traders dumped stocks on worries about the global economy and tensions between North and South Korea.

Relations between North and South Korea, already strained over the sinking of a South Korean warship, deteriorated to their worst point in many years.

South Korean President Lee Myung-bak announced Monday that his country is suspending trade with North Korea and closing its waters to the North's ships in the wake of a report from Seoul that concluded North Korea sank a South Korean warship in March.

North Korea said on Friday the peninsula was heading toward war and it was ready to tear up all agreements with the South after it accused the reclusive state of torpedoing a navy ship near their disputed border.

Evidence overwhelmingly proves North Korea fired a torpedo that sank a South Korean warship in March, killing 46 sailors, investigators say.

South Korea's military believes a torpedo fired from a North Korean submarine sank its navy ship last month, based on intelligence gathered jointly with the United States, a news report said on Thursday.

North Korea says it was not involved in the sinking of a South Korean warship near their disputed maritime border last month.