North and South Korea agreed to a second round of talks Sunday after marathon, night-long negotiations fell short of resolving a crisis that has pushed them to the brink of armed conflict.

The two sides called a recess in the early hours of the morning after nearly 10 hours of discussions and agreed to meet again at 3:00 pm (0600 GMT) to "narrow down differences", said South Korea's presidential spokesman Min Kyung-Wook.

North and South Korea sat down to urgent top-level talks Saturday, seeking some way out of an escalating crisis that has pushed both their militaries to the brink of an armed conflict.

The talks in the border truce village of Panmunjom began shortly after the expiration of a North Korean deadline for Seoul to halt loudspeaker propaganda broadcasts across the border or face military action.

In a modern, high-tech world of sophisticated, subliminal messaging, screaming taunting messages over banks of loudspeakers seems like a decidedly old-school style of propaganda.

Retro or not, it has proved effective enough to prompt North Korea to threaten war if South Korea does not switch off the speakers it recently dusted off and retrieved from the military attic to harangue its rival across the border.

U.S. forces briefly suspended exercises in South Korea on Thursday after North Korean artillery fired several rounds across the border, a Pentagon spokesman said Friday.

Commander William Urban said U.S. forces have since resumed scheduled joint exercises with the South Korean military, but remain in "an enhanced state of readiness."

U.N. Secretary-General Ban Ki-moon on Friday urged North and South Korea to put a halt to a worrying escalation of tensions on the divided peninsula.

Ban "urges the parties to refrain from taking any further measures that might increase tensions," said his spokeswoman Eri Kaneko.

North Korean leader Kim Jong-Un put his frontline troops on a war footing Friday to back up an ultimatum for South Korea to halt high-decibel propaganda broadcasts across the border.

The move came as military tensions on the divided Korean peninsula soared following a rare exchange of artillery fire on Thursday that put the South Korean army on maximum alert.

South and North Korea traded artillery fire across their heavily militarized border on Thursday, in a rare exchange that left no casualties but pushed already elevated cross-border tensions to dangerously high levels.

North Korea followed up with an ultimatum sent via military hotline that gave the South 48 hours to dismantle loudspeakers blasting propaganda messages across the border or face further military action.

Tens of thousands of South Korean and U.S. troops Monday began a military exercise simulating an all-out North Korean attack, as Pyongyang matched Seoul in resuming a loudspeaker propaganda campaign across their heavily-fortified border.

The annual Ulchi Freedom exercise, which will run through August 28, is largely computer-simulated, but still involves 50,000 Korean and 30,000 U.S. soldiers.

North Korea on Friday denied it was behind a series of mine blasts earlier this month that maimed two South Korean soldiers and triggered a spike in cross-border tensions.

The powerful National Defense Commission (NDC) said South Korean accusations that its soldiers had sneaked across the border and planted the mines along a known patrol route was "absurd".

North Korea on Friday threatened to turn Seoul into a "sea of fire" unless South Korean activists stop the launches of propaganda leaflets across the heavily fortified border.

The warning came hours after South Korean police blocked activists from launching leaflets amid elevated military tensions on the divided peninsula.