South Korea today announced steps to tighten the vice on the North's already stumbling economy in punishment for sinking one of its navy ships, and both sides intensified war-like rhetoric.
South Korean President Lee Myung-bak, in a nationally televised address, said he would take the issue to the UN Security Council, whose past sanctions are already sapping what little energy North Korea's communist economy has left.
UN Secretary General Ban Ki-moon expressed confidence the Council would take "appropriate" measures.
The United States, which backs Seoul, said the situation was "highly precarious" and that it would take part in a joint naval exercise with the South.
China, the North's only major ally, urged calm.
Last week international investigators issued a report accusing the North of torpedoing the Cheonan corvette in March, killing 46 sailors in one of the deadliest clashes between the two sides since the 1950-53 Korean War.
The United States, which has 28,000 troops on the peninsula, threw its full support behind South Korea and said it was working hard to stop the situation from worsening.
The Pentagon announced plans for a joint US-South Korean anti-submarine drill "in the near future" and said talks were underway on joint maritime interdiction exercises. Seoul believes a North Korean submarine infiltrated its waters and fired on the Cheonan.
With US secretary of state Hillary Clinton in Beijing, Washington pressed China to rein in the hermit state, which is already at loggerheads with the international community over its program to build nuclear weapons.
China has avoided taking sides in the issue of the sunken ship. Analysts say it fears destabilizing the grip of North Korean leader Kim Jong-il, who looks increasingly frail as he tries to secure the position of his youngest son as successor to the family dynasty that has ruled for more than 60 years.
Vitriolic comments across the heavily defended border are rattling investors and niggling at diplomatic relations.
Few analysts believe either Korea would dare go to war. The North's military is no match for the technically superior South Korean and US forces. And for the South, conflict would put investors to flight.
"I solemnly urge the authorities of North Korea ... to apologize immediately to the Republic of Korea (South Korea) and the international community," the South Korean president said in his address.
Reuters