South Korean soldiers stand guard at a loudspeaker used for blaring propaganda toward North Korea near the demilitarized zone north of Seoul. (Lee Sang-hak/Associated Press)

North Korea says it will sever all ties and communication with Seoul as retaliation for what it calls a "smear campaign" over the sinking of a South Korean warship.

North Korea's official Korean Central News Agency quoted the Committee for the Peaceful Reunification of Korea as saying late Tuesday that Pyongyang would also expel all South Koreans working at a joint industrial park in the border town of Kaesong.

The announcement came after South Korea began a multi-pronged action against North Korea by sending propaganda broadcasts into the North for the first time in six years.

The South's resumption of psychological warfare — including radio broadcasts and loudspeakers along the border blaring propaganda — were among measures the government announced Monday to punish Pyongyang for a March 26 torpedo strike that sank the warship Cheonan, killing 46 sailors.

Activists shout slogans as they burn a North Korean flag and a picture of North Korean leader Kim Jong-il during a rally in Seoul on Tuesday. (Jo Yong-Hak/Reuters)

Trade slashed

The South is also slashing trade and denying permission to North Korean cargo ships to pass through South Korean waters.

A team of international investigators concluded last week that a torpedo from a North Korean submarine tore apart the Cheonan. The sinking was the South's worst military disaster since the 1950-53 Korean War, which ended with an armistice but no peace treaty.

The North denies involvement and has warned that retaliation would mean war. It has threatened to destroy any propaganda facilities installed at the heavily militarized border.

On Tuesday, the North claimed dozens of South Korean naval ships violated the countries' disputed western sea border earlier this month and threatened to take "practical" military measures in response.

South Korea's military had no immediate response other than to say that North Korea routinely makes similar accusations.

North Korea is already subject to various UN-backed sanctions in response to its nuclear weapons and missile programs. The latest steps announced by Seoul are seen as among the strongest it could take short of military action.

Canada cuts ties with North

Canada said Tuesday it has formally suspended diplomatic relations with North Korea over the sinking of the South Korean warship.

The move came a day after the government announced it would tighten restrictions on trade, investment and other relations with North Korea, and would suspend visits to Canada by high-level North Korean officials.

Canada has had limited diplomatic relations with the government of Kim Jong-il in Pyongyang, but those will now end. A spokeswoman for Foreign Affairs Minister Lawrence Cannon said relations had included "advocacy" visits by Canadian officials to talk about North Korea's nuclear activities.

Canada sent three navy experts to the multinational team that investigated the warship sinking, and concluded the vessel was sunk by a torpedo.

China factor

U.S. Secretary of State Hillary Rodham Clinton on Tuesday stepped up pressure on China to back international action against North Korea, calling peace and security on the Korean Peninsula "a shared responsibility."

U.S. Secretary of State Hillary Clinton talks with Chinese President Hu Jintao at the Great Hall of the People in Beijing on Tuesday. (Saul Loeb/Assciated Press)

"Now we need to work together again to address the serious challenge posed by the sinking of the South Korean ship," Clinton said after two days of talks with Chinese officials.

"No one is more concerned about peace and stability in this region as the Chinese," she said. "We know this is a shared responsibility and in the days ahead we will work with the international community and our Chinese colleagues to fashion an effective, appropriate response."

Meanwhile, the U.S. is planning two major military exercises off the Korean Peninsula in a display of force intended "to deter future aggression" by North Korea, the White House said. There are 28,500 American troops in South Korea.

South Korea wants to bring North Korea before the United Nations Security Council over the sinking. UN Secretary General Ban Ki-moon said Monday he expects the Security Council to act, but China — North Korea's main ally and a veto-wielding member of the Security Council — has so far done little but urge calm on all sides.

Propaganda campaign

South Korea's military resumed radio broadcasts late Monday airing Western music, news and comparisons between the South and North Korean political and economic situations.

The military also planned to launch leaflets by balloon and other methods to inform North Koreans about the ship sinking.

In coming weeks, South Korea also will install dozens of propaganda loudspeakers and towering electronic billboards along the heavily armed land border to send messages enticing North Korean soldiers to defect to the South. The North warned Monday it would fire at any propaganda installations in the demilitarized zone.

On Tuesday, North Korean state media cited the powerful National Defence Commission as saying the North's soldiers and reservists were bracing for a "sacred war" against South Korea.

The South Korean Defence Ministry and Joint Chiefs of Staff said they have not obtained any indications of unusual activity by North Korea's military.