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North Korea said yesterday it would start implementing a nuclear disarmament deal struck in February and awaits a visit by UN inspectors now that a dispute over its funds frozen at a Macao bank had been resolved.

A team of International Atomic Energy Agency (IAEA) inspectors arrived in Beijing yesterday and is scheduled to go to Pyongyang today to help lay the groundwork for shutting down the North's reactor and source of bomb-grade plutonium.

"As the funds that had been frozen at Macao's Banco Delta Asia have been transferred as we demanded, the troublesome issue of the frozen funds is finally resolved," the North's KCNA news agency quoted a Foreign Ministry spokesman as saying.

He said there could now be "action for action".

"As part of that, there will be discussions with (IAEA) delegates on June 26 in Pyongyang on shutting down nuclear facilities and inspections and monitoring."

The North said the amount of the funds may not have been all that large but the freezing the assets was an example of what it saw as a hostile policy toward it by Washington.

Analysts said the main reason Pyongyang was upset about the US action was that it effectively cut off their access to international banking.

The North said it would use the frozen funds for humanitarian purposes.

US nuclear envoy Christopher Hill, who made a rare and surprise overnight visit to Pyongyang last week, said he expects the North to start shutting its Soviet-era Yongbyon reactor in the next two to three weeks.

The North Korea had refused to honor the disarmament-for-aid deal struck by the two Koreas, the United States, Japan, Russia and China until it got the money back.

The Yongbyon complex is at the heart of the North's nuclear arms program and includes a plutonium reprocessing plant.

While the first step of the deal calls for a closure of the North's nuclear facilities in exchange for fuel oil, the goal of the six-party talks is for the North to completely scrap its nuclear arms program in exchange for massive aid, security guarantees and better diplomatic standing.

"Now we are going to negotiate how to verify and make sure the reactor will be shut down and sealed, so this is the next step on this long trip," Olli Heinonen, the IAEA's deputy director in charge of global nuclear safeguards, told reporters at Beijing's international airport.

Heinonen's four-member team is expected to stay for five days in North Korea.

The North ejected IAEA inspectors in December 2002 after the United States charged it with having a secret program to enrich uranium. It tested its first nuclear device in October 2006, drawing widespread condemnation and UN sanctions.

Despite signs of a reduction in tension, Pyongyang's official Rodong Sinmun newspaper accused Washington earlier yesterday of preparing for an attack.

"The US anachronistic hostile policy and moves for military confrontation... (are) escalating the tensions on the Korean Peninsula and increasing the danger of war," the newspaper said, according to KCNA.

(China Daily via agencies June 26, 2007)