North Korea reportedly test-fires missile on same day Kim’s death is announced as South Korean president calls for calm.

South Korean President Lee and US President Obama agreed to “closely co-operate” following Kim’s death [AFP]

North Korea has test-fired a missile off its eastern coast, South Korea’s Yonhap news agency reported, as South Korea’s military was placed on high alert in the wake of the death of North Korean leader Kim Jong-il.

South Korean President Lee Myung-Bak earlier on Monday called for calm as the government was placed in “emergency mode” amid fears that Kim’s death could further destabilise relations between the two Koreas, who have remained technically at war since an armistice halted the Korean War in 1953.

“President Lee (Myung-Bak) urged the public to go about their usual economic activities without turbulence,” a senior presidential official told a televised news conference on Monday.

Following news of Kim’s death, Lee convened an emergency national security council meeting and ordered all government officials on emergency response status, meaning they are restricted from taking leave or travelling.

“All Blue House [parliament] officials are in emergency mode,” a presidential spokesman said.

The spokesman said Lee had spoken to US President Barack Obama about two hours after Kim’s death was announced.

“The two leaders agreed to closely co-operate and monitor the situation together,” a presidential spokesman said.

Obama reaffirmed the US’ commitment to the stability of the Korean Peninsula and the security of its “close” ally and would stay in close touch as the situation developed, according to a communique from the White House.

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Uncertainty over the implications of the North Korean leader’s death also affected stock markets in Asia with South Korea’s benchmark KOSPI stocks index slumping 3.43 per cent on Monday.

South Korean military chiefs said that it had stepped up border air surveillance, with Seoul asking its US ally, which stations 28,500 troops in the South, to step up monitoring by planes and satellites.

The demilitarised zone between the two Koreas is considered the most heavily fortified frontier in the world.

“Monitoring and security around border areas has been strengthened. We are paying close attention to any movements by the North’s military,” a defence ministry spokesman told the AFP news agency.

“All commanders are on alert and the South and US are beefing up the sharing of military intelligence. There have been no particular moves by the North’s military yet.”

‘Trigger for changes’

People on the streets of South Korea were both cautious and worried in their reaction.

“I hadn’t much imagined what it would be like when Kim Jong-Il died, but now he has. I’m shocked and I’m very interested in what will happen from now on,” Byun Mi-Sook, a housewife in Seoul, said.

Businessman Kim Sung-Il, 49, expressed hope that North Korea would change after its leader’s death.

“The death will be, and should be, the trigger for changes in and out of North Korea,” he said.

University student Kim Lee-Soo, 21, said South Koreans and their government should “stay calm and try to respond appropriately, as this will have a huge influence in the South’s stance in international society”.

However, internet reaction was less restrained.

“No one should pay respects to the dead,” said user Lim Jung-Min on the Nate portal.

Tensions between the two Koreas have been heightened since the South accused the North of sinking a warship in March 2010 with the loss of 46 lives.

The North denied involvement in the sinking but shelled a South Korean island in November 2010, killing four people.

Many units in the North’s more than one million-strong armed forces are stationed close to the heavily fortified border, along with thousands of missiles.