*Draft resolution seen at the earliest next week
*New punitive measures not expected to be sought
*China, Russia not reluctant, diplomats say
UNITED NATIONS, May 27 (Reuters) - Key powers on the Security Council have agreed in principle that North Korea must face sanctions for defying a U.N. resolution by exploding a second nuclear device, Western diplomats said on Wednesday.
They said the agreement came out of talks on Tuesday among the five permanent Security Council members -- the United States, Britain, France, China and Russia -- and Japan. South Korea, which is not a council member, was also present.
"There is a clear commitment by the (seven countries) to go for sanctions," a U.N. diplomat close to the talks said on condition of anonymity. "There was no reluctance that I could notice from either China or Russia."
His comments were confirmed by a second diplomat close to the talks. China, the nearest Pyongyang has to a major ally, and Russia have traditionally been reluctant to impose sanctions on North Korea or any other U.N. member state.
The diplomats predicted that the seven countries would not have a draft resolution ready to circulate to the full 15-nation council for comments and an eventual vote until next week at the earliest.
The council on Monday unanimously condemned North Korea's atomic test, saying it was a violation of international law. Diplomats said the seven key players planned to meet on Thursday or Friday to discuss the list of possible sanctions.
They said the council would not seek new punitive measures but would look for ways to enforce and expand sanctions laid out in resolution 1718, which the council passed in October 2006 after North Korea's first nuclear test. Those sanctions have largely been ignored and unenforced.
Measures under discussion are the addition of more companies to the U.N. blacklist of firms aiding Pyongyang's nuclear and missile programs and expanding the arms embargo to ban the import and export of all arms, not just heavy weapons.
Other possibilities include increased restrictions on North Korea's financial and banking relations with the rest of the world, restrictions on flights to and from North Korea and the designation of North Korean officials to face travel bans and asset freezes, one of the diplomats said.
The goal of the sanctions is to target North Korea's leadership and not the country's 23 million people living in poverty, the diplomats said.
Another measure under discussion is the inspection of cargo coming in and out of North Korea, which one of the diplomats said was a very sensitive issue for North Korea's neighbor China. Beijing is loathe to consider boarding North Korean ships and seizing cargo, the diplomat said.
In addition to condemning the North Korean nuclear test, the diplomats said the resolution would demand that Pyongyang refrain from exploding any more atomic devices and urge it to rejoin stalled six-nation aid-for-disarmament talks.
It would also call on North Korea to return to the nuclear Non-Proliferation Treaty, which it withdrew from in 2003, and ratify an international treaty banning all nuclear tests that the United States and China have yet to ratify. (Editing by Cynthia Osterman)
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