South Korea-US drills begin despite North Korean threat

SEOUL, Feb 28 (agencies): South Korean and U.S. forces began Monday military exercises that they say are defensive but which have raised tension and led to North Korean threats to use nuclear weapons and turn Seoul into a "sea of flames." The North's threats were similar to rhetoric unleashed last year when tension peaked on the Korean peninsula after two attacks by the North killed sailors and civilians in the South and drove its conservative government to pledge retaliation. The friction dampened market sentiment in Monday trading, with stocks closing down although defense-related issues outperformed the index. The won currency was briefly hit, although it regained ground on demand from domestic exporters. Bond investors shrugged off the tension.