Before wrapping up cabinet level talks here, the two Koreas also agreed to resume military talks aimed at reducing tension on the divided peninsula and the prevention of further naval clashes in disputed waters in the Yellow Sea.

"South and North Korea have agreed to cooperate in making a second round of six-way talks fruitful for a peaceful settlement of the nuclear issue," a joint press statement said.

North Korea announced Tuesday that it would attend a new round of six-party talks in Beijing on February 25.

The first round in August involving the two Koreas, China, Russia, Japan and the United States were inconclusive and North Korea later said it had no interest in follow-up talks.

The nuclear crisis cast a long shadow over the high-level talks, whose agenda focused on inter-Korean economic exchanges including tourism, cross-border transportation and an industrial park and reunions of families.

South Korea's chief delegate, Unification Minister Jeong Se-Hyun, demanded that the North must respect a 1991 joint declaration by Seoul and Pyongyang to rid the Korean peninsula of nuclear weapons.

But Jeong's counterpart, Kim Ryong-Song, noted Pyongyang had recently offered a freeze of its nuclear drive in exchange for economic and other concessions from the United States and its allies.

Washington has rejected the offer, calling for complete, irreversible and verifiable dismantlement of North Korea's nuclear programme.

The Northern delegation initially objected to mentioning the nuclear issue in the joint press statement, insisting that the nuclear row is separate from inter-Korean talks.

South Korean Foreign Minister Ban Ki-Moon on Thursday said that Seoul is willing to reward North Korea if its offer of a nuclear freeze is meant as a short-term process toward ultimate dismantling of its nuclear programme.

At the conclusion of three-days of the cabinet-level meeting, the two Koreas also agreed to hold military generals' talks at the earliest possible date, according to the six-point joint press statement.

"The South and North agreed to hold talks between military authorities of the two sides to discuss reducing military tension on the Korean peninsula," the statement said.

The prevention of naval clashes in the rich fishing grounds in the Yellow Sea will top the agenda of such military talks, a spokesman of the South Korean delegation said.

"The military talks will be aimed at easing military tension in the Yellow Sea that regularly rise during the fishing season in May and June every year," spokesman Shin Eun-Sang said.

In the first known naval clash between the two Koreas since the Korean War ended in 1953, seven South Korean soldiers were wounded and some 30 North Koreans were killed or injured in 1999 in the Yellow Sea.

In 2002, six South Korean sailors were killed and North Korean casualties were believed to be larger in another naval clash.

The two Koreas also called for the speeding up of work on a joint project to build an industrial zone at Kaesong, on the North Korean side of the heavily fortified border, in the joint statement.

On humanitarian matters, they agreed to arrange a new reunion of families separated by the division of Korea around late March.

The ministers agreed to meet again in Pyongyang in May 4-7.

All rights reserved. Copyright 2003 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.

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