S. Korea picks first woman PM

South Korea's new PM, center, is congratulated by students in Seoul

SEOUL, South Korea -- South Korea's president has picked the country's first woman prime minister and sacked his defense minister in the wake of a deadly inter-Korean naval skirmish.

In a cabinet reshuffle on Thursday, Kim Dae-jung replaced six cabinet ministers and his prime minister, in a move seen as boosting the government's image five months ahead of presidential elections. (Profiles of key ministers)

The reshuffle of one-third of the cabinet follows a spate of scandals that have rocked Kim's administration, including a violent naval clash with North Korea last month and corruption dramas that have ensnared two of the president's sons.

The appointment of Prime Minister Chang Sang at the top of a list of largely non-career politicians is seen as a bid to boost Kim's government in its last year of office and to form a neutral cabinet ahead of the December elections and August by-elections.

Chang, a 62-year-old from outside Kim's party who serves as president of Ewha Women's University, will replace veteran politician Lee Han-dong. Although the post is largely ceremonial, it marks a shift from tradition in a male-dominated society.

South Korea's 48 million people are set to go to the polls on December 19 to elect a successor to the 77-year-old Kim, who is barred by the constitution from standing for a second five-year term.

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Seoul's financial markets largely ignored the cabinet overhaul, which left Kim's economic team unchanged. Ministers in charge of foreign policy and ties with North Korea also remained in place.

Defense shake-up

The reshuffle came days after the navies of the two rival Korean states fought a gunbattle near the disputed western sea border, a clash described as the worst between the two Koreas in three years.

Four North Korean sailors were killed and nineteen were wounded, while North Korea admitted casualties, without giving further details.

South Korea blamed North Korea for the "premeditated" incident, while North Korea claimed that South Korean vessels fired first.

The naval calsk has damaged Kim's "Sunshine Policy" with the North

The clash dealt a serious blow to the South Korean president's "sunshine policy" of engaging North Korea. The two Koreas are still technically at war.

Defense minister Kim Dong-shin, who came under fire for what the navy acknowledged was a tardy response to the June 29 clash with North Korea, was replaced in the reshuffle of the 18-member cabinet.

Kim named as defense minister Lee Jun, 62, a retired army general, head of the ministry's reform committee and an official in the governing Millennium Democratic Party (MDP).

Also affected in the shakeup were the justice, tourism, information, health and maritime affairs ministers.

-- CNN Seoul Bureau Chief Sohn Jie-Ae contributed to this report