The sun rises as ROK's navy ships patrol off Yeonpyeong island December 22, 2010. [Photo/Agencies]

SEOUl - The Repbulic of Korea (ROK)'s army said it  will hold its largest-ever live-fire drill near the military  border with the Democratic People's Republic of Korea (DPRK) on Thursday.

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The drill, involving artillery, fighter jets and the largest number of personnel in a peace-time exercise, comes after the ROK's live-fire artillery exercise on Monday on the island near the tensely guarded sea border and is likely to infuriate Pyongyang.

"Yes, it will be a show of force against that," an army officer said when asked if the shelling of Yeonpyeong last month was a factor in the drill's planning.

He added similar drills had been staged previously on more than 50 occasions, but the scale this time was unprecedented.

It will take place in Pocheon region, less than 50 km north of downtown Seoul.

Tension on the peninsula had begun to ease on Wednesday after suggestions the DPRK might admit UN nuclear monitors and the ROK's finance minister said the local economy was weathering the standoff.

China, has continually urged dialogue to resolve the crisis. Seoul's Joongang Daily said South Korea should practice "nimble diplomacy" and forge a closer relationship with China.

"As long as there is a constant threat from the North to launch a surprise attack, we must be on high alert from a military perspective," the newspaper said.

"But such preparations should be combined with diplomacy. We should reduce our diplomatic dependence on the United States and strengthen our ties with China and Russia."

Finance Minister Yoon Jeung-hyun, speaking before the announcement of the drill, said that domestic financial markets had weathered the crisis and the ROK economy, Asia's fourth-largest, stayed on a growth track.

But he warned that the tension could still dent consumer spending with a key sentiment measure due on Friday.