North Korea responded by threatening to discard military agreements protecting cross-border trade with the South, and has reportedly put its army on a war footing. The heightened tension has raised concerns about a conflict on the Korean peninsula.

The North's defence commission issued a statement on Friday that accused South Korea of faking the sinking, and warned that the Korean peninsula was headed "towards the brink of war."

China "rejects any acts that harm peace and stability" on the peninsula, Wen said.

"We hope the South Korean government handles this issue appropriately and we will closely consult with it."

Trilateral summit

The Chinese government has not yet publicly blamed Pyongyang for sinking the ship, one of the worst military attacks against South Korea in more than half a century.

China is North Korea's only major ally and its largest trading partner. Kim Jong-il, the North Korean leader, visited China earlier this month in a show of friendship.

But South Korea and Japan both hope China -- a veto-wielding permanent member of the United Nations Security Council -- will approve tougher international sanctions against the North.

The leaders of Japan, China and South Korea will hold a trilateral summit this weekend on the island of Jeju.

Yukio Hatoyama, Japan's prime minister, spoke with Barack Obama, the US president, on Thursday and both leaders pledged to pursue international action against North Korea.

"The prime minister and President Obama agreed that North Korea's conduct is unforgivable and that Japan and the United States will cooperate on the issue," said Hirofumi Hirano, Hatoyama's chief spokesman.