Yonhap news agency, quoting an unidentified South Korean government official, said the US, Chinese and South Korean foreign ministers had held phone conversations about the latest proposal regarding BDA.

It said Washington suggested taking BDA off a US Treasury blacklist on condition its top executives resigned to take responsibility for allegedly ignoring the North's reported money laundering and counterfeiting.

The US also wants China to play an increased role in settling the financial dispute, according to the official.

South Korea's Foreign Minister Song Min-Soon and US Secretary of State Condoleezza Rice held telephone talks Monday and Tuesday, Yonhap quoted the official as saying.

They agreed quickly to find a solution to the financial dispute in a way "that can satisfy all parties involved," the official said.

Rice also had phone conversations with Chinese Foreign Minister Yang Jiechi on the issue, the official was quoted saying.

A foreign ministry spokesman said there was a conversation between Song and Rice but could not confirm the rest of the Yonhap report.

Washington said the North's BDA accounts were unfrozen in March but the North has had problems finding a foreign bank to transfer money seen as tainted. It wishes to make a transfer, rather than just withdrawing the cash, to ensure it has regained access to the international banking system.

Yonhap quoted diplomatic sources as saying China was likely to respond to the latest US proposals during the current G-8 summit in Germany, pushing the five other countries involved in the talks to achieve a breakthrough in the banking dispute by mid-June.

BDA chairman Stanley Au has petitioned against the US Treasury's blacklisting of his bank, and has strongly denied undertaking any illegitimate transactions on behalf of North Korea.

earlier related report
US, Japan call for tough G8 line on North Korea
Heiligendamm, Germany (AFP) Jun 06 - The United States and Japan on Wednesday called on G8 partners to take a tough line against North Korea's nuclear arsenal, warning their patience with the reclusive state is running out. North Korea featured prominently in talks between US President George W. Bush and Japanese Prime Minister Shinzo Abe ahead of the Group of Eight summit in the German resort of Heiligendam, officials said.

Abe said North Korea had not done enough to ease international concerns over its nuclear programme, and a dispute over Japanese abducted by North Korea in the 1970s and 80s.

"So we agreed that the G8 leaders need to send a strong message to North Korea on these issues" in the declaration at the end of the summit, Abe said after the Bush talks.

"There is a common message here, and that is we expect the North Koreans to honor agreements," Bush commented.

"And it's very important for the Japanese people to know that I strongly support Shinzo Abe's desire to deal with this very important issue ... the abduction issue," the US leader added.

"Both the leaders equally said that their patience must have limits," said a Japanese government official, who declined to be named.

Early Wednesday, the Japanese premier pressed North Korea to take immediate action to meet its promise to close a nuclear reactor suspected of fueling its weapons programme.

"For North Korea, the exit to escape is getting narrower and narrower," Abe told journalists.

"Unless (North Korea) resolves the problems, there won't be any exit," he said. "If North Korea leaves the problems unsolved, we should take severe action."

North Korea in April missed a key deadline in a disarmament-for-aid deal due to a dispute with the United States over frozen assets.

Abe, who is known for hardline views on North Korea, also urged the G8 to confirm a united front over Pyongyang's abduction of Japanese citizens in the Cold War era.

"I want to make an effort to send a strong message from the G8 over both the nuclear and abduction issues," Abe said.

"The cooperation of the international community should not run to waste."

On Tuesday, Abe won the European Union's support for his drive on North Korea as he held an EU-Japan summit in Berlin with German Chancellor Angela Merkel, whose country currently holds both the EU and G8 rotating presidencies.

"The EU and Japan reaffirmed their strong commitment to the goal of denuclearisation of the Korean Peninsula," the two sides said.

In an apparent breakthrough accord in February, the impoverished communist state agreed to close its only working reactor at Yongbyon by mid-April in return for massive aid and diplomatic concessions.

But North Korea refuses to act until it recovers 25 million dollars which have been frozen in a Macau bank since 2005 under US-instigated sanctions.

Japan has taken the hardest line at six-nation nuclear talks and has imposed economic sanctions, saying it will not help North Korea until the emotionally charged kidnapping dispute is resolved.

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