Tensions escalated along the North Korea-South Korea border on Friday after the North fired two rounds at its southern neighbour.

South Korean troops immediately fired back, an official told The Associated Press.

The shots from North Korea were fired towards a South Korean guard post in the Demilitarized Zone between the two countries, an official at the Joint Chiefs of Staff in Seoul told AP.

No one was injured and it wasn't clear whether the shots represented a military action or were an accident.

However the shots came just hours after the North vowed to retaliate after the South rejected a Pyongyang proposal for military talks.

It's the latest escalation in an ongoing game of military brinksmanship that hit a high point when North Korea sunk the South Korean warship Cheonan in March, killing 46 sailors.

Earlier this week Pyongyang demanded that Seoul resume large-scale food aid shipments despite the current tensions. The demand came after the North seized a South Korean fishing vessel earlier in the month.

And in August, tensions were once again high after the North fired 110 rounds near the disputed border. All the shells landed harmlessly in the water within the North's territory.

Earlier that month, South Korea held five days of naval drills off the west coast of the divided peninsula, that the North called a rehearsal for invasion.

There is no word yet whether South Korea will take retaliatory steps following Friday's provocation.

On Thursday, Canada's Foreign Affairs Minister Lawrence Cannon said Ottawa was establishing new trade sanctions and diplomatic restrictions against North Korea.

Diplomatic talks will be restricted to security concerns, human rights and humanitarian issues, inter-Korea relations and consular officials.

Cannon said all imports from and exports to North Korea will be halted, apart from certain humanitarian exceptions.

There is also a ban on investment in North Korea by Canadians or people in Canada.

The new sanctions also restrict the provision of financial services and the transfer of technology to North Korea.

All North Korean ships and aircraft are also banned from either landing in Canada or passing through its airspace, Cannon said.