One of South Korea's most prominent business leaders, Chung Ju-yung, of the Hyundai group, has held a rare meeting with the reclusive North Korean leader, Kim Jong-il.

He said on his return that Mr Kim had agreed to further economic exchanges and had discussed co-operation in the oil industry.

Kim Jong-il: Known as ''Dear Leader''

It is the first known meeting between Kim Jong-il and an outsider since he took over as leader of the country in 1994.

As the founder of the giant Hyundai business group, Mr Chung is South Korea's most celebrated industrialist.

Now 82, he has handed over direct control of the company to his sons and has pursued a mission to develop business ties with North Korea, where he was born.

Mr Chung's ambitions will have received a major boost through having secured a meeting with the North Korean leader.

Since succeeding his father in 1994, Mr Kim has kept a low public profile, only gradually taking on the formal titles of office.

Mr Chung crossed the closely guarded border on Tuesday accompanied by a shipment of 500 cows sent to ease North Korea's food shortage.

Mr Chung was born in North Korea

On his return, Mr Chung described Kim Jong-il as a kind and respectful young man and said they had both agreed to co-operate for the benefit of the peninsula as a whole.

He said Mr Kim told him of an oil discovery and wanted Hyundai to help build a pipe line.

The North Korean leader has also approved Hyundai's plans to develop a tourist complex and begin tours for South Korean visitors.

A spokesman for the South Korean president described the meeting as very significant.

It will be seen as a step forward for what the government calls its ''sunshine policy'' of engagement towards North Korea.