North Korea criticized major land and sea military exercises to be staged by the South on Thursday, but stopped short of threatening a retaliatory strike as tension remained high on the divided peninsula.

In a show of military might, South Korea will hold a major
land drill in the Pocheon region, between Seoul and the heavily armed demilitarized zone (DMZ) separating the two Koreas.

It will also continue naval live-fire exercises 100 km (60 miles) south of the maritime border with North Korea.

The drill, involving a larger scale of firepower and personnel than the usual exercise at the army training ground, is an indication that conservative President Lee Myung-bak wants to underscore renewed determination to stand tough with the North.

He has replaced his top defense officials with more hawkish military men, a response to criticism of a perceived weak response to hostile acts from the North, including a submarine attack in March and the shelling of an island last month.

"We're keeping up the alert," a Defense Ministry official said on the condition of anonymity.

A large contingent of mechanized units operating tanks, three dozen self-propelled artillery, fighter jets and multiple rocket launchers, are set to stage the live-fire drill starting at 0500 GMT just miles from the border with the North.

"(South Korea) is trying to hide the provocative nature toward the North of the war exercises," Pyongyang's official KCNA news agency said in a comment issued in the form of a news dispatch rather than in the name of any government organization.

The South Korean Army is making no secret that the drill is aimed at displaying its firepower to its neighbor.

"Yes, it will be a show of force against that," an army officer said on Wednesday, when asked if the shelling of South Korea's Yeonpyeong island last month was a factor, although he said similar drills had been staged before.

Seoul's financial markets were steady as investors kept a close eye on how North Korea will react to the drills, although the Pyongyang's threatening remarks had in the past failed to have a lasting effect.