When Russia failed to withdraw its troops from Manchuria by an appointed date, Japan issued a protest. Russia replied that it would agree to a partition of Korea at the thirty-ninth parallel, with a Japanese sphere to the south and a neutral zone to the north. But Manchuria was to be outside Japan's sphere, and Russia would not guarantee the evacuation of its troops. Despite the urging of caution by most genro, Japan's hardliners issued an ultimatum to Russia, which showed no signs of further compromise. The Russo-Japanese War broke out in February 1904 with Japanese surprise attacks on Russian warships at Dalian and Chemulpo (in Korea, now called Incheon). Despite tremendous loss of life on both sides, the Japanese won a series of land battles and then decisively defeated Russia's Baltic Sea Fleet (renamed the Second Pacific Squadron) at the Battle of Tsushima in May 1905. At an American-mediated peace conference in Portsmouth, New Hampshire. In the Treaty of Portsmouth Russia acknowledged Japan's paramount interests in Korea and agreed to avoid "military measures" in Manchuria and Korea. Both sides agreed to evacuate Manchuria, except for the Guandong Territory (a leasehold on the Liaodong Peninsula) and restore the occupied areas to China. Russia transferred its lease on Dalian and adjacent territories and railroads to Japan, ceded the southern half of Sakhalin to Japan, and granted Japan fishing rights in the Sea of Okhotsk and the Bering Sea.