North Korea on Tuesday fired  dozens of artillery shells at a South Korean island, setting  buildings on fire and prompting a return of fire by the South,  Seoul's military and media reports said.  

A witness said residents of the island of Yeonpyeong, off the west coast of the peninsula near a disputed maritime border, had been evacuated during the shelling.

The exchange, which lasted for about an hour and then  stopped abruptly, was the most serious between the two Koreas  in years.

South Korea's military said one marine had been killed and  three seriously wounded in the shelling, the biggest attack in  years. The island is about 3 km (1.8 miles) south of the sea  border and 120 km (75 miles) west of Seoul.

YTN television quoted a witness as saying 60 to 70 houses were on fire after the shelling and TV footage showed plumes of smoke coming from the island. It said a South Korean fighter jet had been deployed to the west coast after the shelling. 

"Houses and mountains are on fire and people are  evacuating. You can't see very well because of plumes of   smoke," a witness on the island told YTN. "People are  frightened to death and shelling continues as we speak." 

News of the exchange of fire sent the won tumbling in offshore markets with the 1-month won down about  four percent in  NDF trading. US 10-year Treasury futures  rose and the Japanese yen fell. 

The South Korean central bank said it would hold an  emergency meeting to assess the possible market impact of the  shelling. - Reuters