SEOUL (Reuters) - North Korea has set no-fly and no-sail zones off its east and west coasts that indicates it will conduct major military drills, but test firing of short-to-medium-range missiles cannot be ruled out, South Korea's Yonhap news agency said on Wednesday.

"The North's military ... is preparing large-scale combined military exercises so it may have blocked off the areas for nautical firing or fighter jet firing exercises," Yonhap quoted a South Korean government source as saying.

"But the firing of missiles cannot be ruled out."

One of North Korea's top generals, in a rare appearance on state television on Tuesday, said Pyongyang had torn up its armistice deal with Washington and threatened military action against the U.S. and South Korea if military drills between the two countries continued. The military exercises began on March 1.

(Reporting by Choonsik Yoo and Jack Kim; Editing by Nick Macfie)