US refuses to end N Korea freeze

Mr Hill has said the US needed to take action

The US has said it will not drop financial measures it has taken against North Korea despite Pyongyang's threat to strengthen its nuclear forces.

The Assistant Secretary of State, Christopher Hill, said the US had taken action to prevent money-laundering through banks and counterfeiting.

North Korea has said it will not rejoin talks until the sanctions are dropped.

Six-nation talks on North Korea's nuclear programme began in 2003 but have been stalled since last year.

Stalemate

Mr Hill said in a speech to business leaders in Seoul that North Korea "needs to understand that as long as it's going to be producing nuclear weapons, we're going to have a really close look at the finance".

North Korea has refused to rejoin the negotiations until the US lifts the financial sanctions, under which about $24m (£14m) of funds in a bank in Macau have been frozen.

He also questioned North Korea's commitment to the talks, saying that the rewards offered by the US for Pyongyang's co-operation dwarfed the amounts frozen in Macau's Banco Delta Asia bank.

Kim Kye Gwan said North Korea would adopt a hardline approach

North Korean nuclear envoy Kim Kye Gwan had said the communist state would adopt an "ultra hardline manner" unless the US relaxed its financial pressure.

"There is no compromise and flexibility on this issue," he said. "I will go to the negotiating table the moment I seize the assets with my hands."

In September last year North Korea agreed to dismantle its nuclear programme in return for aid and security guarantees.

However, attempts to find a formula to implement the deal have made no headway.

Mr Kim said that while the talks were deadlocked, North Korea was taking the opportunity to bolster its military deterrent forces.