Officials issued an alert for almost the entire country as Bolaven -- the strongest typhoon for almost a decade to hit the country -- swept towards flood-affected North Korea.
Scores of flights were grounded, ferry services were suspended and schools in Seoul and several other areas were shut Tuesday, while almost 200,000 homes lost power.
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No deaths were immediately reported, apart from at the shipwreck on the southern island of Jeju. Coastguard rescuers swam or waded through storm-tossed seas to link ropes to one of the boats and rescue 11 crewmen, a coastguard spokesman told AFP.
Six others swam ashore of their own accord. One ship was pushed close to shore while the second was broken in two and sank, he added.
Dramatic video footage showed coastguards in wetsuits struggle through high waves to reach the first boat 50 metres (yards) offshore and connect ropes.
Crew members were then seen pulled to safety one after another. The ships were registered in Weihai city in China's Shandong province.
The transport ministry said all 87 sea ferry services had stopped running. A total of 247 flights -- 183 domestic and 64 international -- have been cancelled since Monday.
The typhoon -- packing winds of 144 kilometres per hour (90 miles per hour) -- brought heavy rain and strong winds to southern and western areas. It toppled street lights and signs, shattered windows, uprooted trees, tore off shop signs and even demolished a church spire.
On Jeju, TV footage showed homes with collapsed roofs and uprooted trees.
The US and South Korean armed forces called a temporary halt to a large-scale joint military exercise which began last week.
The weather service said Bolaven was passing over the Yellow Sea west of South Korea and would come closest to Seoul, a city of some 10 million people, around 2:00 pm (0500 GMT).
It was expected to make landfall in North Korea around 6:00 pm. The impoverished North is already struggling to recover from a devastating drought followed by floods earlier this summer.
In the South, the National Emergency Management Agency said 197,751 homes in Jeju and in the southwest and south-central regions had so far lost power.
A total of 54 people, mostly in the southwest, were evacuated from their homes and taken to shelters. Some 16 homes were damaged.
Weather officials said Typhoon Tembin was also threatening the Korean peninsula, moving at a speed of 16 kilometres an hour northward from Taiwan.
Tembin was forecast to be some 200 kilometres west of Jeju early Friday.
