(Refiles to drop reference to number of shells fired in 2nd bullet point)
* N. Korea twice fires artillery shells near disputed maritime border
* S. Korea returns artillery fire
* Markets shrug off incident
By Jack Kim
SEOUL, Aug 10 (Reuters) - North Korea test fired artillery shells into waters near a disputed border on Wednesday, provoking a South Korean volley of warning shots and raising tensions between the rivals just as they had restarted talks.
South Korean military officials said it appeared the North was conducting drills off the west coast of the divided peninsula, but that some of their shells had landed close to the maritime border.
The South responded with verbal warnings and tit-for-tat warning shots of its own.
In the first incident the North fired three shots at around 1:00 p.m., and the South returned three artillery rounds toward the same area about an hour later.
At dusk, the North fired three more shots, at least one of which landed near the border triggering return fire from the South, a military official said.
The South's response-in-kind came after the government was heavily criticised for failing to react with force last year when North Korea shelled one of its islands, Yeonpyeong, in the same area. Four people were killed, including two civilians.
The attack on the island was the first on civilians since the end of the 1950-53 Korean War.
"It is our assessment that it (the shelling) was part of a training exercise by the North," a South Korean military official said of the mid-day incident.
"Three shots were heard. Our assessment is one shell landed near the NLL. Accordingly we fired three shots back."
Explaining why the South took an hour to respond, a defence official said: "We could not get visual confirmation about where the North's shells landed, and we needed to use equipment to assess where they landed."
He said there was no unusual activity in the North indicating imminent aggression.
Later another military official said the North a similar incident occurred at about 8:00 p.m. (1100 GMT). The North fired three artillery shells, triggering the South to fire warning shots in return. No further action ensued, he said.
Fishing boats in the vicinity were called to port and Yeonpyeong residents were evacuated to emergency shelters, media reports said.
Markets barely reacted to the incident.
The South Korean military officials said it was unclear at this point if any of the North Korean shells had landed on the South's side of the NLL, or the Northern Limit Line, the disputed maritime border.
The NLL was unilaterally drawn up by the U.S. military at the end of the 1950-53 Korean War, which has been the scene of several skirmishes over the past decade.
Last November, the North fired some 150 shells at Yeonpyeong island which is near the NLL.
South Korean forces took 15 minutes to respond to that attack, and then returned fire in a way seen as disproportionately weak.
Tensions on the peninsula have subsequently eased after last year's attacks, and last month, the two Koreas and the United States discussed ways to restart talks on disarming North Korea's nuclear programme in return for ending its economic and political isolation.
The two Koreas are still technically at war having only signed a truce to end the 1950-53 Korean War.
Both Koreas regularly conduct exercises near their disputed maritime border, raising the risk of a miscalculation by either side which could ignite a wider war.
Earlier this year, soldiers in the tense area fired rifles at a South Korean airliner they mistakenly thought was a North Korean fighter plane.
Media reports said last month North Korea was gearing up for a large combined arms land, sea, and air exercise. The drill appeared to be aimed at countering a annual joint U.S.-South Korean exercise in the area next week.
In March last year, a South Korean warship was torpedoed in an attack in the same area that killed 46 sailors. The South blamed the attack on Pyongyang, but the North denied it was responsible.
In another sign of simmering tensions, South Korean media reported that a team of North Korean agents have been assigned to kill South Korea's defence minister after he vowed Seoul would retaliate militarily if Pyongyang repeats attacks against the South. (Additional reporting by Ju-min Park; Writing by Jeremy Laurence, Editing by Ed Lane)
Our Standards: The Thomson Reuters Trust Principles.
