The United States and the Democratic People's Republic of Korea (DPRK) held a second day of bilateral talks on Wednesday, raising hopes of a breakthrough in the nuclear issue.

Envoys from the two sides, who met for 6 hours on Tuesday and another 1-1/2 hours on Wednesday, were planning to hold a third round of discussions in Berlin yesterday (local time), US Assistant Secretary of State Christopher Hill said.

The bilateral meetings explored how to resume the Six-Party Talks, which are aimed at persuading the DPRK to abandon its nuclear ambitions.

Experts said Washington's willingness to talk directly with Pyongyang as the DPRK has long demanded suggests the US may be ready to compromise over a crackdown on the DPRK's finances, despite a nuclear test by Pyongyang in October.

Hill met his DPRK counterpart Kim Kye-gwan at the latter's embassy in Berlin on Wednesday but declined to comment when he left. Although he also declined to give details on the substance of Tuesday's talks he did describe them as "useful discussions".

Some US officials said the Bush administration was now inclined to resolve the dispute over the DPRK accounts at a Macao bank, which it has called "a willing pawn" in the country's illicit financial deals.

US and DPRK finance officials are to resume talks next week in either New York or Beijing, Hill said.

Hill expected in Beijing

But Chinese Foreign Ministry spokesman Liu Jianchao said yesterday that he had not got any information on Beijing hosting the talks.

Liu said he is expecting Hill to visit this month, as another round of shuttle diplomacy kicks off between Germany, Japan, China and the Republic of Korea.

"China always supports direct contact between Washington and Pyongyang and hopes for active results," he said.

"China will work with other parties to create a pleasant environment for a peaceful resolution of the DPRK nuclear issue."

As for the bilateral financial talks, the US seems to be showing some leeway on maintaining or lifting sanctions on certain accounts, said Ren Xiao, an expert on the Korean Peninsula with Shanghai's Fudan University.

Currently the US Treasury Department is scrutinizing $24 million of DPRK accounts frozen in the Macao bank to see if some of the money could be considered legitimate and released to Pyongyang, US officials say.

"The White House may ask for some promises from the DPRK that it could use as leverage in future negotiations before it finally lifts the restrictions," said Ren.

He added that the DPRK is unlikely to soften its stance while DPRK officials continue to perceive aggression from the US.

"Any breakthrough, either in a bilateral or multilateral framework, is a tricky target unless Washington and Pyongyang make strategic changes in their policy", he said.

source: China Daily /Agencies