PAJU, South Korea (Reuters) - When North Korea sent hundreds of balloons carrying trash over the border to South Korea last week, the move sparked emergency alerts and round-the-clock media coverage in its neighbour.

But while many South Koreans likely did not linger for too long on the incident, for residents living near the heavily fortified border, it was just the latest in a worrying rise in tensions between the Koreas.

"Some people consider it a problem for someone else's neighbourhood," said Yoon Seol-hyun, who owns a guesthouse and a travel agency in the border town of Paju, urging all South Koreans to pay attention and help do more to calm the situation.

Friction has been increasing as the South responded to the balloons by resuming military activities along the demarcation line. Seoul has not ruled out the return of loudspeakers to blast propaganda at the border with the North.

The border area is popular with local and foreign tourists keen to take a peek at the isolated North, but Yoon said his business in Paju, which is about 35 km (22 miles) north of the capital Seoul, had been hurt by the rise in tensions.

No Hyun-ki, 60, another Paju resident, is also worried about the recent tit-for-tat retaliation between the Koreas.

"Then there's no choice... but to have a sense of fear that North Korea's artillery might fly towards this place," said No, describing Paju as "the tensest city".

The two Koreas remain technically at war since an armistice agreement ended fighting in the 1950-1953 Korean War.

Their militaries face off across the inter-Korean border and North Korea has deployed missiles and rockets aimed at the South and routinely threatens to annihilate its neighbour.

North Korea has said it will suspend sending trash balloons but vowed to resume the practice if leaflets critical of the country were flown from the South again.

Nonetheless, North Korean defector and activist Park Sang-hak has vowed to keep sending balloons carrying anti-North Korean leaflets unless the North's leader Kim Jong Un apologises for his "wrongdoings".

Park could not immediately be reached for comment, but a statement on his civic group's website said it had sent 20 balloons carrying 300,000 leaflets and 2,000 USB cards containing K-pop and Korean dramas into the North in early May.

South Korea's Unification Ministry which handles relations with the North said in a statement it was monitoring the issue of sending leaflets over the border, though noted that the practice was protected by freedom of speech.

Sending anti-North Korean leaflets across the border has been controversial in South Korea, prompting at times clashes between activists and residents in border towns over the years.

"What residents in Paju will like such actions that escalate tensions?" said Yoon, who said he works with other locals to try to block balloon launches.

(Reporting by Hyun Young Yi and Dogyun Kim in Paju, and Hyunsu Yim in Seoul; Editing by Ed Davies and Alex Richardson)

By Hyun Young Yi and Hyunsu Yim