Seoul, South Korea (CNN) -- In a sharp escalation of hostility along their disputed sea border, North and South Korean forces traded fire Tuesday, a deadly skirmish that jacked up diplomatic tensions in a volatile region.

Two South Korean marines were killed and 15 South Korean soldiers and civilians were wounded when the North fired about 100 rounds of artillery at Yeonpyeong Island in the Yellow Sea, South Korea authorities said, according to the South Korean Yonhap news agency.

South Korea's military responded with more than 80 rounds of artillery and deployed fighter jets to counter the fire, defense officials said.

Firing between the two sides lasted for about an hour in the Yellow Sea, a longstanding flashpoint between the two Koreas. In March, a South Korean warship, the Cheonan was sunk in the area with the loss of 46 lives in a suspected North Korean torpedo attack.

This latest action occurred during South Korean maritime military drills.

In Seoul, the South Korea government swiftly denounced the action as an "indisputable armed provocation against the Republic of Korea. Making matters worse, it even indiscriminately fired against civilians. Such actions will never be tolerated."

In its statement, the South Korean government said it "immediately and strongly responded to the provocation in accordance with the rules of engagement" and will retaliate against any additional acts of provocation in a resolute manner."

North Korea, meanwhile, said the incident stemmed from South Korean military drills, codenamed Hoguk, exercises that Pyongyang calls "war maneuvers for a war of aggression."

The "South Korean puppet group" engaged in "reckless military provocation" by firing "dozens of shells" inside its territorial waters "despite the repeated warnings of the DPRK" or Democratic People's Republic of Korea, the North's military said in a statement.

"The revolutionary armed forces of the DPRK standing guard over the inviolable territorial waters of the country took such decisive military step as reacting to the military provocation of the puppet group with a prompt powerful physical strike," the statement said.

"It is a traditional mode of counter-action of the army of the DPRK to counter the firing of the provocateurs with merciless strikes," said the statement, which warned that it "will unhesitatingly continue taking merciless military counter-actions against it" if the border is crossed.

Sanctions have been progressively placed on North Korea in response to a succession of nuclear and missile tests and the sinking of the South Korean warship in March. Countries that have been negotiating with North Korea over its nuclear program issued swift reaction.

The United States "strongly" condemned North Korea's action, and a U.S. Defense official told CNN that the "hope is that this is just one isolated incident, not an escalation into a different military posture" by the North.

Chinese Foreign Ministry spokesman Hong Lei said China had "taken note of relevant reports" and expressed its "concern." "Relevant facts need to be verified and we hope both parties make more contributions to the stability of the peninsula," he said.

Russia's Interfax news agency said Russia condemned North Korea's artillery shelling and said "those who initiated the attack on a South Korean island in the northern part of the inter-Korean maritime border line assumed enormous responsibility."

Japanese Prime Minister Naoto Kan urged his cabinet members and related ministries to put the utmost effort to gather the information on the NK artillery attack as well as to prepare for unexpected development of the situation.

Yeonpyeong island is part of a small archipelago about 80 kilometers [49 miles] west of the South Korean port of Inchon, which serves Seoul, and is close to the tense Northern Limit Line, the maritime border between the two Koreas in the Yellow Sea.

North Korean artillery is extremely difficult to hit, because it is dug into coastal cliffs. Though the North has tested its artillery -- and tested anti-shipping missiles -- it has not fired artillery into South Korean territory in recent years.

One of North Korea's most potent threats is artillery dug in along its demilitarized zone with South Korea and ranged on Seoul.

While the reason for the attack was in dispute, North Korea watchers had theories.

"I think they are very frustrated with Washington's response to their uranium program and they think that Washington has almost given up on negotiations with North Korea," said Choi Jin-wook, senior researcher at the Korea Institute of National Unification.

"I think they realize they can't expect anything from Washington or Seoul for several months, so I think they made the provocation."

"I definitely think this is centrally directed from Pyongyang. This can't be done without orders from Pyongyang," he added.

Over the weekend, news broke that North Korea had showed off its uranium-enrichment facilities to a visiting U.S. scientist. Washington reacted by saying that the North's nuclear moves had been clear all along.

The United States said it would not dismiss restarting six-party talks aimed at denuclearizing the North. However, it said it would not return to negotiations unless North Korea showed good faith.

North Korea is desperately reaching for bargaining chips, Choi said.

"They want food. They are starving to death. They are trying to make Seoul and Washington move. Otherwise, they are in big trouble," Choi said before Tuesday's artillery attack. "And this is a transition period for the North Korean leadership; they need to provide gifts to the elite, but they don't have the resources."

Meanwhile, with national leader Kim Jong Il apparently in ailing health, his son Kim Jong Un is being raised to prominence in the isolated state, in what pundits see as a succession process.