The US side demanded that North Korea take "concrete initial steps" to denuclearization within between one and a half and two months, the news agency said, citing anonymous diplomatic sources in Beijing.

The steps included a freeze on North Korea's Yongbyon reactor and allowing a return of inspectors from the UN International Atomic Energy Agency, it said.

But North Korea, emboldened by its October nuclear test, demanded that the United States first lift economic sanctions on a Pyongyang-linked bank in Macau accused of laundering and counterfeiting money.

North Korea last year withdrew from six-way talks -- which include China, Japan, the two Koreas, Russia and the United States -- in response to the sanctions, which blacklisted millions of dollars in the impoverished state's funds.

North Korea returned to the talks last week after a 13-month hiatus during which it tested its atom bomb.

earlier related report
North Korea's Kim cuts back public activities in 2006
Seoul (AFP) Dec 27 - North Korean leader Kim Jong-Il significantly reduced his public appearances this year amid missile and nuclear tests and prioritised attendance at military events, analysts said Wednesday.

So far this year Kim has made 99 public appearances compared to 121 during the same period last year, said Yonhap, South Korea's only news organization officially authorised by the government to monitor North Korean news outlets.

Of this year's appearances, 66 were related to military functions or visits to army units, up from 62 a year ago.

Kim made 64 public appearances in the first half of this year and just 35 in the second half. The reclusive leader often disappears from the public eye following key events.

There were no reports of visits for 40 days after his country test-fired missiles in early July. Kim again disappeared for two weeks after North Korea conducted an underground nuclear test on October 9.

"Kim's public activities reflect a need to boost the morale of soldiers amid a tense standoff with the United States," said Paik Hak-Soon, a North Korea-watcher at Seoul's Sejong Institute.

The North's state media, in its latest report Tuesday of Kim's movements, said he visited an army unit to inspect training.

He was satisfied to hear that the unit "has trained all its servicepersons into a match for a hundred fighters through tireless effective training," the Korean Central News Agency reported.

Kim, who is the military's supreme commander among other titles, presented soldiers with binoculars, a machine gun and an automatic rifle as gifts and posed for a photograph with them, it added.

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