SEOUL- A senior Chinese envoy was in North Korea to prod the reclusive state back to stalled nuclear talks while the South sent a team across the border on Monday for talks to restart tourism projects halted due to political wrangling.

The North will also host the U.N.'s top political envoy later this week, with analysts saying this engagement may bode well for the dormant six-way disarmament-for-aid talks and could lead to Pyongyang reducing the security threat it poses to the region.

The destitute North is feeling pressure to return to the nuclear talks, where it can win aid to prop up its broken economy, due to U.N. sanctions imposed after its nuclear test in May 2009 and a botched currency revaluation that sparked inflation and rare civil unrest.

Analysts said there is a chance the North could launch military moves if the talks do not go well. Market players have said this would dampen sentiment and serve as a reminder of the dangers of investing in the troubled peninsula.

Chinese Communist Party international affairs chief Wang Jiarui flew to North Korea at the weekend. Wang met Kim Jong-Il last year, and received a denuclearisation pledge from the North Korean leader.

Wang met senior officials other than Kim at the weekend. He is expected to stay four days and have discussions with Kim, the South's Yonhap news agency quoted diplomatic sources as saying.

China, the destitute North's biggest benefactor, is seen as having the most influence on the reclusive state. Kim Jong-il told the Chinese premier in October he could return to the nuclear talks if conditions were right.

In a move seen as bettering the mood with the United States, the North's most important dialogue partner in the nuclear talks that also include China, Japan, Russia and South Korea, Pyongyang at the weekend released a U.S. missionary it had held since late December for illegally entering the country.

North Korea is recent weeks has been reaching out to South Korea, which once was a major aid donor, but also threatening its neighbour and U.S. military ally by firing artillery near its neighbour on the troubled peninsula.
Analysts said the North wants to underscore the threat it poses to North Asia, which is responsible for one-sixth of the global economy, in a ploy to increase its bargaining leverage.

The Koreas were set to begin talks on joint tourism projects in the North run by an affiliate of the South's Hyundai group.

The tours, suspended for more than a year, once earned the North's leaders tens of millions of dollars a year and Kim Jong-il has appealed to have them restarted.

South Korean President Lee Myung-bak, who took office two years ago, ended unconditional handouts to the North and linked aid to progress his neighbour makes in reducing the military threat it poses to North Asia.

(Editing by David Fox)

China South Korea