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imageSEOUL: North Korea said it had arrested two South Koreans engaged in espionage for the South's spy agency, in a move likely to heighten already elevated tensions between the two rivals.

In a despatch late Thursday, the North's official KCNA news agency described the two men, identified as Kim Kuk-Gi and Choe Chun-Gil, as "heinous terrorists" who operated from a base in the Chinese border city of Dandong.

"They zealously took part in an anti-DPRK (anti-North Korea) smear campaign," organised by US intelligence and the South Korean National Intelligence Service (NIS)," KCNA said.

The two arrested men were presented at a "press conference" in Pyongyang, attended by journalists and foreign diplomats.

In Seoul, the NIS said the charge that the two men were working for the agency was "absolutely groundless."

"We are checking whether the two are indeed South Korean nationals," an NIS spokesman said.

Cross border ties are already strained over ongoing joint South Korea-US military exercises that Pyongyang has condemned as provocative rehearsals for invasion.

The KCNA report said Kim and Choe had gathered information about North Korea's "party, state and military secrets."

It was not immediately clear where or when the two men were arrested.

Among other things, Kim was accused of spreading "religious propaganda" from an "underground church" he ran in Dandong, which has a large ethnic Korean community and is a hub of both official and illicit cross-border trade.

Last year, North Korea sentenced a South Korean missionary to hard labour for life on charges of espionage and setting up an underground church.

Although religious freedom is enshrined in the North Korean constitution, it does not exist in practice and religious activity is severely restricted to officially-recognised groups linked to the government.

Pyongyang views foreign missionaries as seditious elements intent on fomenting unrest and those who are caught engaging in any unauthorised activities in the North are subject to immediate arrest.

Copyright AFP (Agence France-Presse), 2015

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