U.S., South Korea try to cool tensions with North

By Jon Herskovitz

SEOUL, Oct 2 (Reuters) - A U.S. envoy held talks in Pyongyang trying to convince the secretive state not to restart its nuclear plant, as the two Koreas looked to mend frayed ties on Thursday with their first direct discussions in almost a year.

The talks coincide with a report North Korea may be aiming to ratchet up regional tensions by upgrading a launch site used to test missiles that can hit all of South Korea and most of Japan.

Assistant Secretary of State Christopher Hill met the North's top nuclear envoy on Wednesday and was scheduled to have further discussions in the communist state's capital on Thursday, the State Department said.

Reports from South Korean media said Hill was prepared to offer a compromise on how to check statements by the North about its nuclear programme in an effort to revive a faltering disarmament-for-aid deal agreed with regional powers.

But State Department spokesman Sean McCormack said on Wednesday that Hill was not going to Pyongyang with an offer to change the "substance" of any verification mechanism.

The North has balked at U.S. verification demands, fearing them to be too intrusive. Washington countered by saying it would only remove Pyongyang from its terrorism blacklist once the North agreed to a "robust" verification system.

Analysts have said North Korea might be trying to pressure the outgoing Bush administration as it looks for diplomatic successes to bolster its legacy. The North might also be thinking it can seek a better deal under a new U.S. president.

The International Atomic Energy Agency said last week North Korea had expelled U.N. monitors from the plutonium-producing part of its Yongbyon nuclear plant and planned to start reactivating the Soviet-era reactor in a week's time. Monitors remained in other areas of the complex, it said.

North and South Korea began military talks on Thursday in their first discussions since Pyongyang cut off inter-Korean dialogue early this year in anger at the policies of the South's conservative new president, who wanted to tie aid to disarmament.

The talks, proposed by the North, are seen by analysts as a possible olive branch.

But North Korea has also been upgrading the facilities at the site of its past missile tests in what may be preparations for another long-range missile launch, a local newspaper reported. [ID:nSEO353966]

"North Korea has replaced a tower crane that propped up the launch pad and is improving the stability of missile fittings such as reinforcing missile supporters," the Dong-a Ilbo newspaper quoted a South Korean government source as saying. (Additional reporting by Jack Kim; Editing by Alex Richardson)