BAGHDAD, Iraq - Kidnappers of a South Korean businessman extended their deadline for his execution, an intermediary said today, and the Seoul government said it would evacuate all its citizens working for businesses in Iraq by early July.

Kim Sun-Il is alive and that his abductors had agreed to extend the deadline for his execution, said Ahmed al-Ghreiri, an employee of the NKTS security firm, which is acting as an intermediary.

"This is humanitarian issue and we are working on it and we expect good news," al-Ghreiri told The Associated Press.

Also, an explosion rocked a Baghdad residential neighborhood today, killing two and wounding two others, witnesses said.

U.S. troops sealed off the area after the late afternoon explosion, and neither American nor Iraqi security forces were in the area at the time of the blast, witnesses said. Three cars were burned and four shops were slightly damaged in the Amiriya neighborhood.

A mortar attack Monday in Baghdad and two assaults on U.S. forces northeast of the capital killed one soldier and wounded nine others, the military said.

Suspected al-Qaida-linked captors had threatened to kill the 33-year-old Kim if the South Korean government did not cancel its planned deployment of 3,000 troops to Iraq by early today.

The Dubai-based Al-Arabiya TV network also said the deadline had been extended, but provided no details or source for the report.

The South Korean government said today it will evacuate the last of its 22 nationals in Iraq by early next month. Most work for South Korean companies that supply the U.S. military, said Commerce, Industry and Energy Minister Lee Hee-beom.

Kim, who works for a trading company in Baghdad, was believed to have been kidnapped about 10 days ago. A videotape broadcast by the Arab television station Al-Jazeera showed him pleading for his life.

The kidnappers claimed to be from the Monotheism and Jihad group led by Jordanian-born terrorist Abu Musab al-Zarqawi, who is believed to have ties to al-Qaida.

In other news, Iran will prosecute eight British navy crewmen detained after they entered Iran's territorial waters with three military patrol boats, state-run television reported today.

In London, the British government summoned the Iranian ambassador, demanding the release of the eight.

The Foreign Office said a senior British official in London had asked Morteza Sarmadi to explain why Iranian guards had arrested the men, while they conducted a "routine mission" in the Shatt-al-Arab waterway.

The eight were detained Monday as they were delivering a patrol boat for the new Iraqi Riverine Patrol Service. The waterway runs along the border between Iran and Iraq.

The sailors were shown sitting silently on chairs and a sofa. Three of them were in British military uniform; five others wore military trousers and civilian T-shirts.

"They will be prosecuted for illegally entering Iranian territorial waters," Al-Alam television said. The station is part of the state-run Iranian radio and television network.

"The vessels were 1,000 meters inside Iranian territorial waters. The crew have also confessed to having entered Iranian waters," the broadcast said.