SEOUL, South Korea: The prospect of reaching a formal peace treaty on the Korean peninsula took a major step backwards today after North Korean soldiers exchanged heavy gunfire with South Korean troops. North Korean officials said several of its soldiers were wounded in the shoot-out and accused the south of committing a "grave armed provocative act." South Korea, which reported no casualties, fired back, saying the skirmish was an "intentional provocation" by North Korea. South Korean military officials said its border guards discovered a small group of North Korean troops on the south side of the demilitarized zone and ordered them to pull back. South Korean troops then fired about 200 warning shots into the air after the northern troops ignored the warning. A direct firefight ensued as the North Korean troops fired at the southern soldiers with rifles followed by mortar rounds and artillery. The battle lasted about 45 minutes. The incident couldn't have come at a worse time. In just three weeks, the two sides, along with the United States and China, are scheduled to hold talks to discuss a formal end to the Korean War.