A coastguard spokesman said he had no information on the report but confirmed the boat was missing.

The seizure, if confirmed, could further inflame tensions after months of angry exchanges over the sinking in March of a South Korean warship, which Seoul blames on Pyongyang.

Yonhap quoted a unidentified coastguard official in South Korea's western port of Incheon as saying the boat -- with four South Koreans and three Chinese aboard -- was detained by the North's authorities.

South Korea's military was Sunday continuing a major exercise in the Yellow Sea designed to send a warning to the North following the warship attack.

The North denies involvement in the warship sinking and has threatened retaliation for what it calls a provocative military exercise.

earlier related report
S.Korea holds second day of major anti-submarine drill
Seoul (AFP) Aug 6, 2010 - A major South Korean naval exercise designed to strengthen defences against North Korean attacks went into its second day Friday, as the communist North bristled over the drill.

The exercise is one of a series planned in coming months in response to what the South says was a deadly North Korean torpedo attack on a warship.

The South has mobilised 4,500 troops, backed by 29 ships and 50 aircraft, for its five-day drill in the Yellow Sea.

This week's manoeuvres do not include US forces, though last week South Korea and the United States staged a massive joint naval and air drill in the Sea of Japan (East Sea) as a show of force.

On Friday service personnel practised attacks on intruding craft and defences against submarines, the Joint Chiefs of Staff (JCS) said, along with a drill to repel attacks on coastline batteries and commando raids.

"Navy ships and marines, backed by jet fighters, repelled simulated attacks by North Korean commandoes," a JCS spokesman told AFP.

Pyongyang has angrily denied responsibility for the March sinking of the Cheonan warship near the disputed inter-Korean border in the Yellow Sea. The incident killed 46 sailors and sharply raised tensions.

The North on Thursday termed this week's drill a deliberate provocation and threatened "the most powerful" retaliation if the South triggers a conflict during the exercise.

"Our people and military will mercilessly crush the provokers and their stronghold with the most powerful war tactics and strike means beyond imagination if they ever dare to set a fire," said a statement from a state body called the Committee for Peaceful Reunification of the Fatherland.

But as of Friday morning no unusual movements by the North had been detected, a JCS spokesman told AFP.

A multinational investigation concluded in May that a North Korean submarine had torpedoed the warship.

Washington has announced new sanctions on the North to punish it for the alleged attack and to push it to scrap its nuclear weapons programme.

But the Obama administration on Thursday stopped short of putting Pyongyang back on a blacklist of countries supporting terrorism, despite pressure from lawmakers to do so.

Then-US president George W. Bush de-listed North Korea in 2008 after it vowed to end its nuclear programme, agreed to inspections by the International Atomic Energy Agency and pledged to disable its nuclear plants.

Despite the tense stand-off, South Korea has agreed to raise the minimum monthly wage for North Korean workers by 5 percent at a joint industrial estate just north of the border.

The increase, which came on Thursday, will be effective for one year starting August 1, the South's unification ministry said, adding the minimum wage for North Korean workers at Kaesong now stands at 60.775 dollars.

Kaesong is the last joint reconciliation project still operating, after relations worsened in recent years between the two Koreas.

About 44,000 North Koreans work for more than 120 South Korean companies producing goods such as textiles, footwear, watches and kitchenware.

The North has intermittently restricted cross-border access to Kaesong during times of tension. South Korea has halved the number of its nationals staying at the estate due to safety concerns since May.

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