North Korea said Saturday that it had begun preparations to shutdown and seal its key Yongbyon atomic reactor in a step toward honouring a landmark nuclear disarmament deal.

Pyongyang was also willing to start moving towards disabling its nuclear facilities but this would depend on how quickly it was rewarded for such actions, South Korean nuclear envoy Chun Yung-woo told reporters in Beijing.

Christpher Hill, the US chief delegate, hailed the statement from the North Koreans, saying it was "balanced and constructive and indicated that they are under way and fulfilling their obligations."

"I think they referred to starting the preparations," he told reporters here. "I don't think they have started to shut down the facilities."

Under a February 13 accord, Pyongyang promised to begin shutting down its nuclear programme within two months in exchange for energy aid and diplomatic concessions.

Hill and Chun were speaking after North Korean officials made the statement at working-level talks, between the six nations involved in the state's nuclear disarmament, ahead of the next round of formal negotiations here Monday.

The US envoy said the negotiations, involving the two Koreas, the United States, Japan and Russia and host China, would last two days.

Progress on the agreement has been hindered by Pyongyang's demands that Washington release some 25 million dollars of North Korean funds frozen in a Macau bank under US financial sanctions.

North Korea's chief nuclear negotiator earlier Saturday said the country would not close its facilities until the United States released all the funds.

"If the United States does not remove all of its restriction on our funds at Banco Delta Asia (BDA), we cannot shut down our nuclear facilities at Yongbyon," Kim Kye-Gwan told reporters on arrival in Beijing.

The US Treasury announced on Wednesday that it had cleared the way for the release of the funds frozen in the Macau-based BDA.

In its ruling, the US Treasury barred US banks from dealing with BDA, an institution it said had laundered money for reclusive North Korea.

But the move now leaves it up to the Macau authorities to decide what to do with the cash after the bank was left in receivership, a US Treasury official said Saturday following talks with authorities in the former Portuguese enclave.

"It will be for the Macau authorities to decide what to do with the funds, whether to release it or not. We did conduct an investigation and hope our investigation will be helpful to their determination," Deputy Assistant Secretary Daniel Glaser told reporters in Hong Kong before heading to Beijing.

Hill said he was confident that the money would be released into North Korean coffers fast enough to avoid blocking the disarmament process.

"We expect money to be moving very quickly in terms of completing this whole case and finally resolving it," he said.

A pro-Pyongyang newspaper on Friday had hailed US moves to resolve the financial sanctions as a "landmark event," raising hopes for progress in long-running disarmament talks.

Hill said he had not seen Kim on Saturday but expected to meet with him possibly on Sunday when the working group resumes talks on denuclearisation of the Korean peninsula.

UN atomic agency chief Mohamed ElBaradei had said on Friday that he hoped an April 13 deadline could be met for starting to dismantle North Korea's nuclear weapons programme.

ElBaradei told reporters on returning to Vienna after visits to Pyongyang and Beijing that he thought the North Koreans "still would like to see that deadline respected and we still hope to do it by April 13."

"If the financial sanctions are over, then we expect the DPRK (North Korea) to invite us to work out the modalities of monitoring and verification" of North Korea's deal to close and seal its Yongbyon plutonium-producing reactor by April 13, the IAEA director general said.

That would be 60 days after the six-party agreement reached in Beijing on February 13.