US President Barack Obama has strongly condemned North Korea's shelling of Yeonpyeong island in South Korea and said the US would defend South Korea. Mr Obama told ABC News that North Korea was "a serious and ongoing threat that needs to be dealt with". The attack near a disputed sea border was also denounced by Russia, Japan and the European Union. South Korea returned fire and threatened missile strikes if there were "further provocations". President Obama described South Korea as an important ally and "a cornerstone of US security in the Pacific region". He said: "We strongly affirm our commitment to defend South Korea as part of that alliance. "We want to make sure all the parties in the region recognise that this is a serious and ongoing threat that needs to be dealt with." He called on North Korea's ally China to communicate to Pyongyang "that there are a set of international rules they need to abide by". In a telephone conversation, Mr Obama and South Korean President Lee Myung-bak agreed to hold combined military exercises in the days ahead to underscore the strength of their alliance, the White House said in a statement. The US has 28,000 troops stationed in the South. South Korea's military had been carrying out an exercise near Yeonpyeong, but it denies opening hostilities by firing towards the North. Two South Korean marines died when dozens of artillery shells landed on the island - most of them hitting a military base. Both soldiers and civilians were wounded. The South fired back some 80 shells. Casualties on the northern side are unknown. South Korea's stock market opened sharply lower on Wednesday, with the benchmark index falling 3.3% in the opening minutes of trading.