N Korea 'to ban US currency'

The ban will coincide with suspension of oil shipments

North Korea is reported to be planning to ban the use of US dollars after Washington decided to halt oil shipments to the communist state.

The measure will come into force in December, according to a report by the official Chinese news agency Xinhua from the North Korean capital Pyongyang.

Xinhua says the US currency will no longer be accepted in foreign exchange shops and residents will have to convert dollars in their bank accounts into other currencies, or they will be automatically changed to euros.

Reports from Pyongyang often cannot be independently verified

Sample euro banknotes and coins have been displayed outside Pyongyang's state-run Korean Trade Bank, with a poster notifying local residents to change their dollars, but no deadline was given, Xinhua said.

The Xinhua report could not be independently verified, but correspondents say the agency is one of the few foreign news services to maintain a bureau in Pyongyang.

Tensions have grown between the US and North Korea - which is on President George W Bush's list of "axis-of-evil" states - after Pyongyang was reported to have admitted it was pursuing a nuclear-weapons programme.

The US said it would suspend oil shipments from December to try to force North Korea to abandon the programme.

Under a 1994 agreement, North Korea promised to stop developing nuclear weapons in return for fuel oil and other benefits, paid for by the US.

On Friday, the communist state was reported to have refused entry to international inspectors checking the use of fuel oil supplied under the nuclear deal.