SOUTH Korea has returned fire into North Korean waters after shells from a North live-fire drill fell into the rivals' disputed western sea boundary.
People living on a frontline South Korean island said they were evacuated to shelters during the exchange.
No shells from either side were fired at any land or military installations, South Korea's Joint Chiefs of Staff said.
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Kang Myeong-sung, speaking from Yeonpyeong island, said anxious islanders were huddled together in shelters.
He said he did not see any fighter jets, but could hear the boom of artillery fire. In 2010, North Korean artillery killed four South Koreans on Yeonpyeong.
The exchange of fire followed Pyongyang's earlier, unusual announcement that it would conduct the live-fire drills, a move seen as an expression of its frustration at making little progress in its recent push to win outside aid.
The North has in recent weeks increased threatening rhetoric and conducted a series of rocket and ballistic missile launches that are considered acts of protest against annual springtime military exercises by Seoul and Washington.
The North calls the South Korea-US drills a rehearsal for invasion.
Pyongyang has also threatened to conduct a fourth nuclear test at some point, though Seoul said there were no signs of an imminent detonation.
After the North's earlier announcement it would conduct firing drills in seven areas north of the sea boundary, South Korea responded that it would react strongly if provoked.
Wee Yong-sub, a deputy spokesman at the South Korean Defence Ministry, said the North Korean message was a "hostile" attempt to heighten tension on the Korean Peninsula.