The South Korean military said it did not suffer casualties in the shooting between two guard posts a half mile apart in the heavily mined Demilitarized Zone, or DMZ, the buffer created at the end of the 1950-53 Korean War to keep opposing armies apart.

North Korea did not comment on the exchange.

South Korean military officials said the North Koreans shot first. The South was investigating whether the shooting was inadvertent or a scheme to rattle nerves, possibly to gain leverage in the dispute over the North's suspected development of nuclear weapons.

"We need to clarify whether it's intentional or accidental before we can say anything about its impact on the nuclear issue," said Lee Jihyun, a spokeswoman for South Korean President Roh Moo-hyun.

A team from the U.S.-led United Nations Command, which oversees the southern half of the DMZ, inspected the site of the shooting near the South Korean town of Yonchon, 35 miles north of Seoul, but had no comment.

U.S. military officials are paying close attention to reports of the incident, said Navy Lt. Cmdr. Jeff Davis, a Pentagon spokesman.

"It appears to be an isolated incident," Davis said Thursday. "Similiar incidents have occurred in the past and serve to illustrate the tense nature of the demilitarized zone."

. The last exchange of fire in the DMZ, in November 2001, caused no casualties. A naval battle between ships from the two Koreas in June 2002 killed six South Koreans and an unknown number from the North.

A Chinese envoy visited North Korea this past week to discuss efforts to peacefully resolve the nuclear issue, and Powell said in Washington on Wednesday that he talked to Chinese Foreign Minister Li Zhaoxing about the trip.

"So the diplomatic track is alive and well and I expect to see some developments along that track in the very near future," Powell told reporters. The United States "is still hopeful of a diplomatic solution," he said.

Yonhap, a South Korean news agency, said North Korea was open to a China-proposed format for talks on the nuclear issue, and negotiations could occur as early as next month if the United States agrees.

China plans to send an envoy to the United States by this weekend to propose three-way talks with North Korea in Beijing, said Yonhap, citing an unnamed South Korean government official. The arrangement would include a followup, U.S.-proposed meeting in which South Korea and Japan would also take part, the agency said.

China, a key player in the dispute because of its close ties to its communist neighbor, hosted talks with U.S. and North Korean officials in April. Efforts to stage more talks have stumbled over North Korea's demand for one-on-one talks with the United States, while Washington wants other countries to be involved.

North Korea recently said it might consider U.S. demands for multilateral talks if it could also meet one-on-one with the United States.

The shootout began at 6:10 a.m. when North Korean soldiers fired four rounds, and South Korean soldiers fired 17 rounds from a K-3 machine gun one minute later, said Maj. Lee of the South Korean Joint Chiefs of Staff, who refused to give his first name. Three of the North Korean bullets hit the wall of a South Korean guard post.

 The South Koreans then issued a loudspeaker broadcast, telling the North Koreans that they were in "clear violation" of the armistice that ended the Korean War.

"Immediately stop the provocation," said the broadcast.

The shootout occurred on the 55th anniversary of the enactment of South Korea's 1948 Constitution. Advancing U.S. and Soviet forces divided the Korean Peninsula after the capitulation of Japanese colonial forces at the end of World War II.

Yonchon, the site of the shooting, is 25 miles east of Panmunjom, a cluster of buildings where the armistice was signed. A combined battalion of more than 500 U.S. and South Korean soldiers handles security in the southern half of Panmunjom.

The U.S. military stopped routine patrols in the 2 1/2 mile-wide, 155 mile-long DMZ in the early 1990s, letting their South Korean allies take over the duty.

The nuclear dispute flared in October when U.S. officials said North Korea admitted it had a clandestine nuclear program in violation of a 1994 agreement with Washington.

The United States and its allies suspended fuel shipments promised under the 1994 deal, and Pyongyang retaliated by expelling U.N. monitors, restarting frozen nuclear facilities and withdrawing from the Nuclear Nonproliferation Treaty.