North Korea 'may shut down nuclear reactor'

North Korea may be preparing to shut down its main nuclear reactor, news reports said today.

The move has renewed hopes that Pyongyang will comply with a disarmament agreement days after it missed a deadline to shutter the facility.

The Yongbyon reactor remains in operation, but there was a high possibility that movement of cars and people at the site recorded in satellite photos could be linked to a shutdown, South Korea's Yonhap news agency reported, citing an unnamed intelligence official. The Dong-a Ilbo daily carried a similar report.

An official at the National Intelligence Service, South Korea's main spy agency, said they were "following and analysing some peculiar movements" around the reactor in North Korea, without elaborating.

Yonhap news agency cited another unnamed intelligence official as saying that South Korea and the US have been closely monitoring some movement since a month ago.

"The intensity of these activities has increased from about a week or two ago," the official was quoted as saying.

"There are activities other than cars and people moving busily."

The report comes after the North missed a Saturday deadline to shut down the reactor and allow UN inspectors to verify and seal the facility under a February agreement.

If the North complies, that would be its first move toward stopping production of nuclear weapons since 2002, the start of the latest nuclear stand-off.

The North is believed to have produced as many as a dozen atomic bombs since then, and conducted an underground test detonation in October.

Pyongyang said last week that honouring its pledge was contingent on the release of money frozen in a separate financial dispute after Washington black-listed a bank where North Korea had accounts. The funds were allegedly used in money laundering and counterfeiting.

The money was freed for withdrawal last week, but it's unclear when the North will move to get its £13m (€19.1m).

South Korean Foreign Minister Song Min-soon spoke by telephone today with his US counterpart, Condoleezza Rice, and the two "strongly expressed expectations that North Korea will soon implement disarmament measures," the Foreign Ministry said in a statement.

Song and Rice "reaffirmed that the door to resolving the (bank) issue is clearly open to North Korea and agreed to continue discussions among related countries to resolve the issue," the statement said.

South Korea's Unification Ministry said today rice aid to the North will be discussed as planned at this week's inter-Korean economic talks, despite media reports that Seoul was considering halting the shipments in an apparent move to ratchet up pressure on the North.

"The issue of food aid will be discussed" at the talks set to begin Wednesday in Pyongyang, Deputy Minister Kim Jung-tae told South Korean media at a briefing that foreign reporters were barred from attending. Kim's comments were later confirmed by the ministry.

South Korea periodically sends rice and fertiliser to the impoverished North, which has relied heavily on foreign handouts since the mid-1990s when natural disasters and mismanagement devastated its economy and famine led to the deaths of as many as two million people.

This year, the North has requested 400,000 tons of rice from South Korea.

Meanwhile, Macau's Banco Delta Asia said yesterday it had filed a legal challenge to Washington's decision to cut it off from the US financial system. The bank told the US Department of Treasury that its accusations "lacked specific facts" and were motivated by politics, the bank said in a statement.

The US move was "politically motivated since it was based on disputes between the US and North Korea." The bank has repeatedly denied knowingly helping in North Korea's alleged illicit activities.

In Washington, the US Treasury Department expressed confidence it would ultimately prevail in the legal challenge.

"The Treasury Department has confidence in the merits of its action against Banco Delta Asia, as demonstrated by the information put forth in the final rule," which cuts the bank off from the US financial system, said department spokeswoman Molly Millerwise.