(Refiles, correcting month of Yeonpyeong attack to November in paragraph 7)
By Jeremy Laurence
SEOUL, Feb 8 (Reuters) - North and South Korean military officers met at their heavily fortified border on Tuesday for the first cross-border talks in over four months, in a bid to defuse tensions on the divided peninsula.
Two deadly attacks against the South last year, and the North's revelations of major advances in its nuclear programme, spiked tensions to their highest level in years and caused jitters in financial markets as the risk of war rose.
Under pressure from Washington and Beijing -- the South and North's respective main allies -- the neighbours have toned down their combative rhetoric and agreed to talk.
The inter-Korean dialogue has also raised the chances of a resumption of stalled aid-for-disarmament negotiations.
A defence ministry official in Seoul said the preliminary round of military talks had started at the truce village of Panmunjom, and that they could take several hours.
The colonel-level talks are aimed at setting the time and agenda for more high-level dialogue, possibly between their defence ministers. Officials say it may take several rounds of working-level talks to prepare for the senior meeting.
The meeting is the first dialogue between the rivals since November, when the North bombarded a South Korean island in disputed waters off the west coast.
Last March, South Korea accused the North of torpedoing one of its navy ships, killing 46 sailors.
Pyongyang denied it sank the vessel, and says the South provoked the shelling of Yeonpyeong island by firing artillery rounds into its water during a military drill.
Tensions simmered through December as both countries exchanged war-like rhetoric, worrying financial markets in a region that boasts one-sixth of the world's economy and is home to the world's second and third largest economies.
Regional powers have urged restraint and nudged the rivals back to the negotiating table, saying that inter-Korean dialogue is a necessary prerequisite to a resumption of six-party aid-for-disarmament discussions.
The impoverished North walked out of the six-party talks in 2009, declaring the forum dead, but over the past six months has been pushing for the process to be restarted.
SOUTH TESTS NORTH SINCERITY
At the height of the crisis, North Korea threatened nuclear war on the peninsula but in a sharp change of tack, it has repeatedly called for dialogue with the South since January.
Some analysts say the about face is an indication that the North is suffering from years of international sanctions and a cut in aid from the South.
The South has said it wants to see whether the North is sincere about reducing tension and agreed to the meetings on the condition that they discuss the navy ship sinking and island bombardment.
South Korean President Lee Myung-bak said last week he was willing to consider meeting the North's leader at a summit in a softening of the South's tone after months of tough talk that included a vow to retaliate if the North attacked again.
The Koreas are still technically at war because an armistice not a treaty ended the 1950-53 Korean War, and have been involved in dozens of deadly confrontations over the years, including cross-border commando raids, political assassinations, an airliner bombing and military clashes.
(Reporting by Jeremy Laurence; Editing by Jonathan Hopfner and Miral Fahmy) (If you have a query or comment on this story, send an email to email@example.com)