By Jonathan Thatcher
SEOUL (Reuters) - North Korea on Tuesday signaled it could return to nuclear disarmament talks it had declared dead six months ago, but a report it was near restoring its atomic plant underlined the secretive state would keep the stakes high.
Leader Kim Jong-il told Chinese Premier Wen Jiabao on a rare visit to Pyongyang that he first wanted talks with the United States. The North sees such talks as key to ending its status as a global pariah that it argues gives it no choice but to have a nuclear arsenal.
"The hostile relations between the DPRK (North Korea) and the United States should be converted into peaceful ties through the bilateral talks without fail," the North's KCNA news agency quoted Kim as saying.
"We expressed our readiness to hold multilateral talks, depending on the outcome of the DPRK-U.S. talks. The six-party talks are also included in the multilateral talks."
In April, a month before its second nuclear test, North Korea said the six-party talks -- between the two Koreas, China, Japan, Russia and the United States -- were finished for good. It walked away from those talks last December.
This is the first time it has suggested it was might return to what has been the only international forum to try to make the North give up dreams of becoming a nuclear warrior in return for massive aid to fix an economy broken by years of mismanagement.
One analyst said it boiled down to impoverished North Korea hoping to convince Washington to end its economic squeeze and the United States wanting to be certain that Pyongyang will not sell any nuclear weaponry abroad.
"North Korea wants sanctions removed ... What the United States wants is some assurance about proliferation because the U.S. doesn't really care about restoration of an obsolete nuclear plant or how much nuclear material the North has got," said Cho Min of the Korea Institute of National Unification.
He said the focus was now on whether Washington sends an official, possibly special envoy Stephen Bosworth, to the North.
The U.S. government has said it is open to direct talks with the North to coax it back to nuclear talks.
The North's chief source of material to build a bomb has been its Yongbyon facilities which it had agreed to dismantle during six-party talks but later said it would restore, accusing the United States of planning to attack it.
"We have obtained indications that point to restoration work being in the final stages," an unnamed South Korean government source was quoted by Yonhap news agency as saying.
North Korea says it is U.S. hostility, and the 28,000 U.S. troops stationed in South Korea, that is the problem.
It has long sought direct talks with the United States, in part to agree a formal peace treaty to the 1950-53 Korean War and gain full diplomatic relations, which would in turn give it access to international financial aid.
The U.S. administration is under pressure to come up with a new tack in dealing with the reclusive state that has for years played cat and mouse in negotiations with the international community, never giving up trying to build a nuclear arsenal.
"An affective American strategy toward North Korea will require a combination of tough measures with serious dialogue and engagement," Joel Wit, an academic and former U.S. State Department official working on North Korea, wrote in a report.
He said a policy of containment and isolation only conceded that North Korea will further develop its nuclear program.
"That, in turn, will undermine stability in East Asia, sow doubts in Tokyo and Seoul about relying too much on the United States for their security and jeopardize cooperation with China."
The visit by the Chinese premier has been a major boost for Kim, increasingly shunned by the international community for nuclear and missile tests earlier this year and facing tougher sanctions. Analysts say the punitive measures hurt its weapons trade, an important source of scarce foreign income.
"There is no doubt that Wen delivered a very clear cut message, China wanted to give a push -- which has been fruitful so far. But you can also understand that North Korea will not just compromise very substantially after just one visit because it is not their style," said Zhu Feng, professor of international security at Peking University.
"The key question is not just how to bring them back to the negotiating table but also how to change their behavior ... that's why my interpretation of Wen's visit is that he delivered a clear cut message and gave North Korea a very timely push, you can't always hesitate, you can't always fool around, you can't always just play tricks...otherwise time is running out and the effects will be very negative for North Korea."
(Additional reporting by Seo Eun-kyung and Jack Kim in Seoul and Emma Graham-Harrison in Beijing; Editing by Ron Popeski)