N Korea nuclear talks explore possible deal

BEIJING, Dec 21 (Reuters) Six-party talks on scrapping North Korea's nuclear weapons were set to gain momentum today after the chief US negotiator raised guarded hopes of agreement by week's end on preliminary steps towards that goal.

Assistant Secretary of State Christopher Hill said US and North Korean negotiators were fleshing out plans to set in motion a joint statement from September 2005. That promised North Korea aid and security assurances in return for nuclear disarmament.

''Certainly we are talking about much more than just agreeing on things on paper. We're discussing actual developments on the ground, and for that reason these discussions are not easy,'' Hill told reporters late yesterday.

Hill said he would be going into fresh talks with North Korea today, and an agreement could be released tomorrow.

His remarks were the first hint of clear progress in the talks between the United States, the two Koreas, Russia, Japan and host China that resumed on Monday after over a year's break.

And they came about 10 weeks after North Korea held its first nuclear test, on October 9., drawing regional condemnation and UN sanctions backed even by its patient chief aid-provider, China.

The veteran US negotiator warned differences could still scuttle a deal, particularly North Korean rancour over financial restrictions Washington invoked last year after determining North Korea had counterfeited US cash and laundered illicit earnings.

''Nothing is agreed unless everything is agreed,'' Hill said.

On Monday, North Korea's chief negotiator Kim Kye-gwan laid out a sweeping set of conditions, including lifting UN sanctions and the US financial crackdown. But the North appears to have taken a more pragmatic tack in subsequent talks.

Sharp disagreements remain, however, especially over the financial squeeze.

A US Treasury Department negotiator said special talks on that dispute were useful but the dispute was far from settled.

Those negotiations may continue in New York in January.

Pyongyang and Washington also face thorny problems on the timing and order of moves, said Hill.

''Really, I can't emphasise enough that we're moving towards implementation, and that means real issues on the ground, and that's always a more difficult phase,'' Hill said.

REUTERS PKS RN0515