Obama to end Asia tour with talks on North Korea

SEOUL (Reuters) - U.S. President Barack Obama will discuss luring a reluctant North Korea back to nuclear dealings and a long-delayed trade pact with Seoul in talks with President Lee Myung-bak on Thursday at the end of his Asian tour.

Obama, who arrived in Asia last week and flies home later in the day, and Lee have been putting pressure on the destitute North by targeting its finances and telling Pyongyang it will win massive rewards if it abandons its atomic ambitions.

North Korea rattled regional security just ahead of Obama's first visit to Seoul since taking office by sparking a naval fight with the South and telling the world early this month it had produced a fresh batch of arms-grade plutonium.

The summit in Seoul is expected to be less problematic for Obama, who just arrived from China where he barely bridged divides on trade, currency policy and the Tibet issue.

"Obama and Lee will send a clear message that they want a comprehensive settlement with North Korea and there is no divide in how they see the issue," said Chung Seong-chang, an analyst at the Sejong Institute think tank near Seoul.

The Obama administration plans to send its first envoy to North Korea in the next few weeks to revive comatose six-way talks on ending the North's nuclear ambitions in return for massive aid to repair its failed economy and better global standing for the largely ostracized state.

Analysts said Obama would not have agreed to the visit unless his government was given some reassurance that Pyongyang would respond by reviving the broader disarmament dialogue.

One area of conflict may be a trade deal struck two years ago under President George W. Bush and yet to be approved by legislatures in either country. Estimates said it could increase their $83 billion a year in two-way trade by about $20 billion.

South Korea insists it will not renegotiate the deal, the biggest trade pact for the United States since the NAFTA accord of the mid-1990s with its immediate neighbors. But Seoul has left the door open for discussions for side deals on areas such as the auto trade.

South Korea removed a potential source of friction by saying it at the end of October it would dispatch a security contingent of police and troops to Afghanistan to help support the U.S.-led mission there.

(Additional reporting by Christine Kim; Editing by Jonathan Thatcher)