President Barack Obama: North Korea 'a serious threat'
US President Barack Obama has strongly condemned North Korea's shelling of Yeonpyeong island in South Korea and said the US would defend South Korea.
Mr Obama told ABC News that North Korea was "a serious and ongoing threat that needs to be dealt with".
The attack near a disputed sea border was also denounced by Russia, Japan and the European Union.
South Korea returned fire and threatened missile strikes if there were "further provocations".
President Obama described South Korea as an important ally and "a cornerstone of US security in the Pacific region".
He said: "We strongly affirm our commitment to defend South Korea as part of that alliance.
"We want to make sure all the parties in the region recognise that this is a serious and ongoing threat that needs to be dealt with."
He called on North Korea's ally China to communicate to Pyongyang "that there are a set of international rules they need to abide by".
In a telephone conversation, Mr Obama and South Korean President Lee Myung-bak agreed to hold combined military exercises in the days ahead to underscore the strength of their alliance, the White House said in a statement.
The US has 28,000 troops stationed in the South.
South Korea's military had been carrying out an exercise near Yeonpyeong, but it denies opening hostilities by firing towards the North.
Two South Korean marines died when dozens of artillery shells landed on the island - most of them hitting a military base. Both soldiers and civilians were wounded.
The South fired back some 80 shells. Casualties on the northern side are unknown.
South Korea's stock market opened sharply lower on Wednesday, with the benchmark index falling 3.3% in the opening minutes of trading.
United Nations spokesman Farhan Haq said Secretary General Ban Ki-moon was "deeply concerned by the escalation of tension on the Korean peninsula".
"The secretary general condemns the attack and calls for immediate restraint," he added.
The current president of the Security Council, British ambassador Mark Lyall Grant, said he was in touch with other members about what to do next.
Russia's foreign minister warned of a "colossal danger", and said those behind the attack carried a huge responsibility.
Japanese Prime Minister Naoto Kan said he had ordered ministers to "make preparations so that we can react firmly, should any unexpected event occur".
The EU and the UK also condemned the North, but China - the North's main ally - refused to apportion blame.
The South Korean president called the incident "an invasion of South Korean territory", and warned that future provocations could be met with "enormous retaliation", including missile strikes on North Korean positions.
Seoul has suspended shipments of flood aid to North Korea, the unification ministry aid.
South Korea had promised a 1bn won ($8.3m) aid package including rice, cement and medical supplies after North Korea was hit by severe floods in August.
North Korea's military command blamed South Korea for the incident.
"The South Korean enemy, despite our repeated warnings, committed reckless military provocations of firing artillery shells into our maritime territory near Yeonpyeong island beginning 1300 (0400 GMT)," the state-run KCNA news agency quoted it as saying.
The North will strike back if South Korea "dares to invade our sea territory by 0.001mm", it warned.
There have been occasional cross-border incidents since the Korean War ended without a peace treaty in 1953, but the latest comes at a time of rising regional tension.
North Korea's reclusive leader Kim Jong-il is thought to be ill and trying to ensure the succession of his youngest son.
The BBC's John Sudworth in Seoul says the heir apparent may be trying to build a reputation with the country's hardline military elite - suggesting a period of further provocation towards the South.
On Saturday, it emerged that Pyongyang had shown off what it claimed was a new uranium enrichment facility to an American scientist.
The move prompted the US to rule out the resumption of six-party talks on nuclear disarmament that Pyongyang abandoned two years ago.
The western maritime border, also known as the Northern Limit Line, has been the scene of numerous clashes in the past.
In March, a South Korean warship sank near the border with the loss of 46 lives. International investigators say a North Korean torpedo sank the ship, although Pyongyang has denied any role in the incident.