The Democratic People's Republic of Korea (DPRK)'s envoy in Britain said Pyongyang had a nuclear deterrent ready to use, but South Korea played down the assertion Friday and said there was no sign the North would walk away from international talks.

DPRK's envoy in Britain, Ri Yong Ho, told Reuters in London Thursday Pyongyang had a nuclear deterrent that was not only ready but powerful enough to deter any U.S. attack.

Asked about Ri's remarks, South Korean Unification Minister Jeong Se-hyun told reporters: "It's hard to see any consistency in various North Korean remarks, and it's more important to consider the overall trend than any one particular outburst."

He did not elaborate on what he meant by an overall trend, but said he believed recent statements by Pyongyang were part of its negotiating posture before six-country nuclear talks on a year-old crisis over the North's nuclear arms ambitions.

In Washington, Chinese Vice Foreign Minister Wang Yi told reporters he saw a good chance those talks would resume.

Thursday, Pyongyang reacted to the planned suspension of an international project to build nuclear power stations in DPRK by threatening to bar the removal of documents and equipment from the site.

The Korean Peninsula Energy Development Organization (KEDO), the consortium building the reactors, is expected to approve a U.S. proposal to suspend the project for one year pending diplomatic attempts to halt Pyongyang's nuclear arms programs. A formal decision is expected by Nov. 21.

A statement by North Korea's Foreign Ministry said Pyongyang would demand compensation for the U.S.-proposed suspension -- a move it said was "nothing surprising," but raised doubts about Washington's interest in diplomatic talks on the nuclear crisis.

Asked if Seoul thought the suspension would turn North Korea away from talks, Jeong said: "The North Korean Foreign Ministry spokesman's statement contained no hint that it would not join the six-way talks."

GRADUAL IMPROVEMENT

The six-way talks involve the two Koreas, the United States, China, Russia and Japan. They met inconclusively in Beijing in August and are expected to meet again before the end of the year.

In Tokyo, the Japanese newspaper Yomiuri Shimbun quoted sources in Washington as saying the United States would offer the North a two-step security assurance to try to restart the talks.

South Korea protested against the North Korean threat to block the removal of equipment from the reactor site, but Jeong said he saw it as part of Pyongyang's negotiating tactics.

Jeong said North Korea might renew demands for compensation for electricity that would have been generated by KEDO's nuclear plants.

The reactor project is based on a 1994 agreement by which the North Koreans froze their nuclear arms program in return for two light-water reactors. The United States initially sent fuel oil to meet energy needs, but stopped a year ago.

The agreement began to fall apart in October last year when the United States announced North Korea had violated it by working on secret uranium enrichment projects. The United States has favored closing down the reactor project, because experts argue North Korea cannot be trusted with fissile material.

But South Korea, which is footing most of the bill, favors a temporary halt, to resume if the six-way talks succeed.

"Suspension means that it can be resumed again," Jeong said. "KEDO will continue discussions with North Korea and the North is likely to bring this up at six-way talks."

Jeong disputed a report this week by the credit rating agency Standard & Poor's saying the collapse of North Korea's economy was just a matter of time.

"The North Korean economy is on a trend of gradual improvement from a bad situation," Jeong said, adding that Seoul believed the North's food deficit was also slowly shrinking.

He said the S&P assessment "probably reflected pessimism about whether North Korea could overcome increased inflation" stemming from North Korea's introduction of market-based price changes last year and from severe shortages of goods.

North and South Korea agreed late Thursday to set up a permanent center for family reunions near Kumgang mountain just north of the Demilitarized Zone bisecting the peninsula.

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