The two Koreas traded heavy machine-gun fire across their border Friday, triggered by the North Korean military trying to shoot down balloons carrying the leaflets, launched by activists in the South.
Some rounds fell on the Southern side, which then responded with high-calibre machine gun fire. No casualties were reported on the South's side, and none are believed to have taken place in the North.
"Because of the irresponsible and provocative acts by the puppet regime... the planned high-level meeting is all but scrapped," Pyongyang's official Internet news provider Uriminzokkiri said.
However it did not shut the door completely. "It is totally up to the South Korean puppets' attitude what would happen to the North-South Korean relations in the future," it added.
A week earlier, the two Koreas had agreed to work on resuming a formal high-level dialogue that has effectively been suspended for seven months.
The agreement came during a surprise visit to South Korea by three top-ranking North Korean officials, two of them close aides to paramount leader Kim Jong-Un, ostensibly to encourage North Korean athletes and attend the closing ceremony of the Incheon Asian Games.
The visit raised hopes of a thaw in strained inter-Korean relations. Pyongyang had repeatedly warned of a "catastrophic" end in cross-border ties unless South Korea halted the launch of the leaflets as the North marked the anniversary of the founding of its ruling Workers' Party.
The North Korean website said the South should have taken its warnings seriously and prevented such launches if it really wants dialogue and improvement in inter-Korean ties.
"The real culprits of this leaflet-launching commotion are the United States and the puppet regime," it said.
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