"We have put no economic proposals forward of the kind that were referenced in some newspapers this morning," Powell said during an impromtu encounter with reporters at the State Department.

The New York Times cited unnamed administration officials as saying that Washington could be prepared to offer "economic incentives" to Pyongyang, if it came clean on its weapons program or welcomed inspectors.

President George W. Bush has previously said that Pyongyang could benefit from a "bold approach" of economic and political steps from the United States -- but only after its nuclear program had been verifiably snuffed out.

Bush said at his Texas ranch he believed the crisis, which erupted in October with a state he has branded as part of an "axis of evil," could end in a "peaceful way."

He also praised the role of Russia and China, which will line up alongside Japan, the United States, South Korea and North Korea itself, at the Beijing talks expected to start August 27.

The State Department's top Asia policymaker, James Kelly, welcomed counterparts from Seoul and Tokyo in the latest stage of a global diplomatic dance leading to the talks.

Kelly, Mitoji Yabunaka, director general of Asia and Oceania affairs at Japan's foreign ministry, and South Korean Deputy Foreign Minister Lee Soo-Hyuck.

The three sides worked towards their "shared goal" of a verifiable and irreversible end to Pyongyang's nuclear program, said Tom Casey, a State Department spokesman.

He said the representatives would have dinner together and would meet again on Thursday if they felt they needed further discussions.

Pyongyang earlier fired its own pre-talks salvo, again demanding a nonaggression pact from Washington.

A North Korean foreign ministry spokesman said Pyongyang would demand Washington drop its "hostile" policy towards the Stalinist state and sign a pact "that would strictly and legally guarantee that neither of the two sides attacks the other."

The spokesman warned in a dispatch on the government mouthpiece Korean Central News Agency that Washington must change its attitude or face a nuclear-armed North Korea.

Russia's Deputy Foreign Minister Alexander Losyukov said as North and South Korean officials were in Moscow that Pyongyang's demands for a nonaggression pact were "absolutely logical."

The United States has consistently rejected a nonaggression pact.

But Powell last week suggested there may be a way for the US Congress to take note of a less formal arrangement, especially if it encompassed other regional powers.

There is no public sign that Bush's administration is ready to modify its refusal to bow to "nuclear blackmail" from Pyongyang by offering large-scale aid or financing in return for an end to the nuclear program.

Bush has refused to countenance one-on-one talks with the Stalinist state, and insisted on the multilateral format to be adopted in Beijing.

The nuclear crisis erupted in October, when Kelly used talks in Pyongyang to accuse North Korea of reneging on a 1994 bilateral nuclear freeze accord by setting up a clandestine atomic program based on enriched uranium.

North Korea then kicked out International Atomic Energy Agency monitors and withdrew from the treaty. Pyongyang has since claimed to have reprocessed 8,000 spent nuclear fuel rods at its nuclear plant at Yongbyon.

Chinese Foreign Minister Li Zhaoxing meanwhile arrived in Seoul to discuss the upcoming meeting with his South Korean counterpart, Yoon Young-Kwan.

Amid the flurry of diplomacy, Russia's Deputy Foreign Minister Alexander Losyukov has been in Beijing this week, while North and South Korean officials were in Moscow. Chinese envoys have also recently travelled to Pyongyang and Tokyo.

WAR.WIRE