"We should not give up our hopes, but objectively looking at the situation, I see it is becoming increasingly difficult to achieve," Shotaro Yachi, vice minister for foreign affairs, told a regular press conference.

Under a February 13 agreement, North Korea promised to shut down and seal its plutonium-producing Yongbyon reactor and other plants by April 14 in exchange for energy aid.

But Pyongyang last month stormed out of talks, which group the two Koreas, China, Japan, Russia and the United States, unless it receives some 25 million dollars of its funds frozen in a Macau bank.

Japan has taken the hardest line in the talks and refused to provide any energy aid due to a dispute over North Korea's past kidnappings of Japanese nationals.

Washington in 2005 blacklisted the money in Macau due to accusations of money laundering and counterfeiting. It announced the end of the sanction last month and said it was up to the Macau authorities to release the cash.

But the funds were not immediately transferred and North Korea has insisted it will not cooperate further unless it sees the money.

"It is a technical problem, but it is regrettable that it has not progressed," Yachi said.

"We hope the issue will soon be taken care of so that we can start the discussions of issues of substance," he said.

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