SEOUL: North Korea confirmed on Thursday it was holding the seven-man crew of a South Korean fishing boat, including three Chinese, after they illegally entered its waters earlier this month.

China earlier voiced concern about reports that its nationals were being held by Pyongyang, which depends heavily on Beijing`s largesse to keep its impoverished economy afloat.

In June, Beijing took a public swipe at Pyongyang after North Korean border guards shot and killed three Chinese suspected of smuggling and wounded a fourth. North Korea apologised and told China it would punish those responsible.

Tensions have mounted on the peninsula this year after the sinking of a South Korean warship -- Seoul says it was sunk by a North Korean torpedo -- and a series of recent military drills by the United States and South Korea.

The North`s official KCNA news agency said the boat was intercepted on August 8 while fishing in waters of its east coast.

"According to a preliminary investigation, there were four South Koreans and three Chinese on board and in their testimonies they confessed that they intruded into the economic waters of the DPRK (North Korea)," KCNA reported.

The South Korean coast guard said at the time the fishing boat had radioed it was being taken by a North Korean patrol to a port in the reclusive state.

The U.S. and South Korea are currently holding a joint military exercise, the second inside a month, angering both Pyongyang and China. They also plan to conduct an anti-submarine warfare exercise next month, the Pentagon said on Wednesday.

Last week, the North fired a barrage of artillery shells in response to a South Korean drill off the west coast.

BDST: 10:27 HRS, August 19, 2010