SEOUL - North Korea warned on Thursday of a "holy war" against the South using its nuclear deterrent as South Korean President Lee Myung-bak vowed a "merciless counterattack" if its territory is attacked again.
Both sides were raising the rhetoric on a day South Korea launched major land and sea military exercises, prompting North Korea to denounce its richer neighbour as a warmonger.
"To counter the enemy's intentional drive to push the situation to the brink of war, our revolutionary forces are making preparations to begin a holy war at any moment necessary based on nuclear deterrent," North Korea's KCNA news agency quoted Minister of Armed Forces Kim Yong-chun telling a rally in Pyongyang.
North Korea regularly threatens to destroy the South and its major ally, the United States, and has wielded the threat of its nuclear deterrent before, despite analysts saying it has no way to launch a nuclear device.
Lee said on a tour of a South Korean forward army base overlooking North Korean territory that the South would not relax its readiness to counter any aggression by the North.
"We had believed patience would ensure peace on this land, but that was not the case," Lee, criticised for perceived earlier weakness to North Korean attacks, told troops.
South Korea held a major land drill in the Pocheon region, between Seoul and the heavily armed demilitarised zone (DMZ) separating the two Koreas. It also continued naval live-fire exercises 100 km (60 miles) south of the maritime border with North Korea.
The drill involves a larger scale of firepower and personnel than usual for an exercise at the army training ground, a further indication that Lee wants to show the public his government can stand up to the North.
A large contingent of mechanised units operating tanks, three dozen self-propelled artillery, fighter jets and multiple rocket launchers, took part in the live-fire drill just miles from the border. It lasted just under an hour.
Lee has replaced his top defence officials with more hawkish military men, a response to criticism of his response to hostile acts from the North, including an attack on a ship in March and the shelling of Yeonpyeong island last month.
"(South Korea) is trying to hide the provocative nature toward the North of the war exercises," the North's KCNA said earlier in a comment, calling the drills "madcap" and "offensive" and referring to the South Korean military as "puppet warmongers", an insult it frequently deploys.
The South Korean army is making no secret that the drill is aimed at displaying its firepower to its neighbour.
"We are facing a crisis because of North Korea, so I came to see this air and ground operation. I want to feel and see the level of South Korea's armed forces," said Kim Tae-dong, a 70-year-old internet businessman, in Pocheon.
"Another North Korean provocation will happen. We should prepare our military perfectly for that."
Seoul's financial markets closed flat, with investors shrugging off the tension. Pyongyang's threatening remarks have in the past failed to have a lasting effect.
Analysts say the North is unlikely, in the near-term at least, to launch a further attack against the South.
For now, the North is likely to wait and see if its latest actions, including an offer to readmit international nuclear inspectors, yield results, such as a return to international talks on its nuclear programme.
China, the impoverished North's only major ally, has urged dialogue to resolve the crisis and has been reluctant lay to blame, frustrating Washington and its allies which want Beijing to do more to rein in Pyongyang. [ID:nTOE6B0024]
Barack Obama is expected to press this point when Chinese President Hu Jintao visits the United States on Jan. 19.
Chinese Foreign Ministry spokeswoman Jiang Yu, when asked about the drills, repeated Beijing's call for a resumption of the so-called six-party talks.
"The current situation on the Korean peninsula remains highly complex," she told a regular news briefing. "We urge parties concerned to exercise calm and restraint."
Pyongyang will probably strike again when the conditions are right, Andrei Lankov, at Kookmin University in Seoul, said.
"The North Korean leaders did not duck the fight this time because they were afraid," he wrote in the Financial Times this week referring to the Monday's drills.
"Rather, they did what a cold-minded tactician should do: they avoided an engagement under unfavourable conditions chosen by the opponent, in order to strike the opponent at the time and place of their own choice, suddenly and forcefully." (Additional reporting by Yoo Choonsik and Danbee Moon; Editing by Nick Macfie)
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