Hopes fade at North Korea talks

N Korea has put too much focus on financial sanctions, the US says

Envoys of six nations have been meeting for the final day of a key round of talks aimed at persuading North Korea to abandon its nuclear programme.

Hopes of a breakthrough were fading as the tough negotiations in Beijing continued for a fifth day.

The US criticised Pyongyang over its insistence that US financial sanctions be lifted, while refusing to focus on the question of its denuclearisation.

The talks, which began in 2003, resumed after a 13-month break.

North Korea agreed to return to the negotiating table two months after it carried out its first nuclear test on 9 October.

Blacklisted

Confirming the talks would end on Friday and he would be flying home the next day, US envoy Christopher Hill admitted he was "not aware of any signs" a deal might be reached.

N KOREA NUCLEAR PROGRAMME Believed to have 'handful' of nuclear weapons But not thought to have any small enough to put in a missile Could try dropping from plane, though world watching closely Low hopes for talks Text of September 2005 deal Talks absorb regional press

He accused the North of failing to take the talks seriously.

"When the (North) raises problems, one day it's financial issues, another day it's something they want but they know they can't have, another day it's something we said about them that hurt their feelings," he said.

"What they need to do is to get serious about the issue that made them such a problem... their nuclear activities."

As the deadline neared, host China stepped up its diplomatic efforts by holding direct talks with the parties - which include China, South Korea, Japan and Russia - in a bid to narrow their differences, China's Xinhua news agency reports.

The US has been trying to persuade North Korea to implement a deal made in September 2005, in which Pyongyang agreed to dismantle its nuclear facilities in return for aid and security guarantees.

Diplomats say the US offered North Korea a further package of incentives - including a written guarantee not to attack - if it agreed to halt its nuclear work and allow verification by UN inspectors.

But the stumbling block is the US decision, soon after the September 2005 agreement was reached, to blacklist a Macau-based bank containing $24m of North Korean money.

Washington accused the bank of involvement in alleged money-laundering and counterfeiting activities by Pyongyang. It led North Korea to walk out of the talks.

Separate meetings on the issue were held by treasury officials from both sides this week. They have tentatively agreed to meet again in the new year.

'Two lanes'

In Washington, US Secretary of State Condoleezza Rice said that the financial issues should be kept separate from the nuclear talks.

"We should not be diverted, somehow, by an issue that is clearly in another lane," she told a news conference.

She also added that the North Koreans themselves had asked that the financial issues be dealt with by a separate working group.

"We cannot be diverted from what we need to do in the six-party talks, which is to have the denuclearization of the Korean peninsula," she continued.