North Korea threatens 'sacred war' against South

North Korea threatened today to launch a "sacred war" against South Korea even as a delegation from Seoul travelled across the countries' heavily fortified border for a meeting on a stalled joint tourism project.

A North Korean government spokesman accused front-line South Korean army units of setting up "virulent" signs that slander North Korea and of inciting "extreme hostility" toward Pyongyang.

"This is little short of a clear declaration of war," the unidentified spokesman said in comments carried by the North's official Korean Central News Agency.

"We will react to the enemy's provocation with a stern punishment and counter its war with a merciless retaliatory sacred war."

The threat came one day after South Korea's Hankyoreh newspaper reported that some South Korean army units near the border had set up anti-North Korea slogans in the wake of two deadly attacks blamed on North Korea last year.

The newspaper carried a photo showing a banner reading "Let's ram guns and swords into the chests of North Korean puppet soldiers!" hanging over the entrance of one army unit in Cheolwon, a town near the central portion of the demilitarised zone separating North and South Korea.

The newspaper said the unit also wrote on its walls such signs as Let's hack the three Kims into pieces, a reference to late North Korea founder Kim Il Sung, his son and current leader Kim Jong Il, and grandson and heir-apparent Kim Jong Un.

South Korea's Defence Ministry confirmed the substance of the report, saying some army units have taken such measures to bolster their soldiers' mental toughness against North Korea.

The two Koreas are technically still at war because their 1950s conflict ended with a cease-fire, not a peace treaty.

North Korea's threat to attack South Korea is only the latest in a series of warnings and hostile statements from Pyongyang aimed at the conservative government of South Korean President Lee Myung-bak.

It comes as the two Koreas were to meet to discuss North Korea's seizure of South Korean assets at the North's scenic Diamond Mountain.

Joint tours to the mountain were suspended in 2008 following the shooting death of a South Korean tourist. North Korea later confiscated or shut down South Korean-owned buildings and other facilities there.

A group of South Korean officials and business leaders crossed the border and headed to the mountain for talks hours after the North's threat, according to Seoul's Unification Ministry.

Animosities between the Koreas have deepened since North Korea allegedly torpedoed a South Korean warship in March last year. The North also shelled a South Korean border island in November. A total of 50 South Koreans were killed.