South Korea fired dozens of artillery rounds toward North Korea on Thursday after the North shelled across the border to protest against anti-Pyongyang propaganda broadcasts by Seoul - the first exchange of fire in 10 months.
North Korea did not return fire but warned Seoul in a letter that it would take military action if the South did not stop the loudspeaker broadcasts along the border within 48 hours, the South's Defense Ministry said.
In a separate letter, Pyongyang said it was willing to offer an opening to resolve the conflict even though it considers the broadcasts a declaration of war, South Korea's Unification Ministry said.
A South Korean military official said the broadcasts would continue. Seoul began blasting anti-North Korean propaganda from loudspeakers on the border on Aug.10, resuming a tactic that both sides had halted in 2004.
South Korea said the North had fired one anti-aircraft shell followed by multiple shells from a direct fire weapon on Thursday.
South Korea's military, which said it fired dozens of artillery rounds in response, raised its alert status to the highest level.
Both countries said there were no casualties or damage in their territory.
South Korean President Park Geun-hye told defense officials to "react firmly" to North Korean provocations, a spokesman quoted her as saying.
"Our military has stepped up monitoring and is closely watching North Korean military movements," South Korea's defense ministry said.
The North Korean army said the South fired 36 rounds, six of which landed near its guard posts, and called the South's firing "reckless provocation," Pyongyang's state KCNA news agency said.
The United States, which has about 28,500 military personnel in South Korea, said it was concerned and closely monitoring the situation.
"Such provocative actions heighten tensions, and we call on Pyongyang to refrain from actions and rhetoric that threaten regional peace and security," U.S. State Department spokesperson Katina Adams said.
The Pentagon said it would "take prudent measures" to ensure the well-being of U.S. personnel, but did not elaborate.
The first North Korean shell landed in an area about 60 km (35 miles) north of Seoul in the western part of the border zone, the defense ministry said. Nearly 800 South Korean residents living close to the border were ordered to evacuate and stay in shelters, according to officials from Gyeonggi province and the city of Incheon.
The exchange of fire was the first between the two Koreas since last October, when North Korean soldiers approached the military border and did not retreat after the South fired warning shots, the South Korean Defense Ministry said at the time.
The North's soldiers fired back in an exchange of gunfire that lasted about 10 minutes, with no casualties.
Tension between the two Koreas has risen since early this month when landmine explosions in the Demilitarized Zone (DMZ) of the border wounded two South Korean soldiers. Seoul accused North Korea of laying the mines, which Pyongyang has denied.
The incident prompted Seoul to stage the propaganda broadcasts.
North Korea on Saturday demanded that the South stop them or face military action and on Monday began conducting its own broadcasts.
Thursday's exchange of fire took place during annual joint U.S. and South Korean military exercises, which began on Monday and which North Korea condemns as preparation for war.
The two Koreas have remained in a technical state of war since the 1950-1953 Korean War ended in a truce, not a peace treaty.
South Korea's won currency weakened in non-deliverable forward trading on the reports of the firing, which came after onshore spot trading had closed. The 1-month contract <KRW1MNDFOR=> rose as high as 1,192.7 won per dollar from around 1,189.8 earlier.
(Additional reporting by James Pearson, Christine Kim and Choonsik Yoo, Editing by Angus MacSwan)