A North Korean soldier shovels sand along the waterfront of the North Korean city of Sinuiju opposite the Chinese border city of Dandong in northeast China, Monday, October 23, 2006. [AP]

South Korean media reported late last week that North Korean leader Kim Jong Il expressed regret for carrying out the country's underground nuclear test on October 9 and told a Chinese envoy that he didn't plan to carry out any more tests.

Kim also raised the possibility the country would return to arms talks, according to the reports, which cited unnamed diplomatic sources in China.

North Korea has shown no public signs of being flexible by continuing its bellicose rhetoric aimed at the United States.

The developments demonstrate the uncertainty that has surrounded the nuclear standoff since the North's test, which prompted the UN Security Council to impose sanctions against Pyongyang.

The head of the International Atomic Energy Agency, the UN nuclear watchdog, said the only real option for trying to curb North Korea's nuclear weapons program is to talk to the government.

"I don't think sanctions work as a penalty," Mohamed ElBaradei said after meeting with Rice in Washington. "Penalizing them is not the solution."

In Seoul, Rep. Choi Sung of South Korea's ruling Uri Party said he met with a "key North Korean official" in Beijing for four hours Sunday night. He said the official is well-versed in China-North Korea relations and inter-Korean ties, but declined to identify him further.

After the meeting, Choi suggested the United States present North Korea with evidence of its alleged illicit financial activities so the state can punish those responsible.

He said the North Korean official said his country could then return to the talks "even if the issue is not completely resolved."

A video grab shows China's State Councillor Tang Jiaxuan (3rd from front L), special envoy of Chinese President Hu Jintao, speaking with North Korean leader Kim Jong-il (3rd R) in Pyongyang, North Korea, October 19, 2006. [Reuters]

The US has sought to cut off the North's access to international banking as punishment for alleged counterfeiting of US dollars and other illicit activity. Pyongyang has denied the charges and boycotted six-nation talks on its nuclear program until the US ends the crackdown.

Choi said the North Korean official told him that Pyongyang sees the financial crackdown as a sign that Washington has no intention of improving relations with the North. He added Washington has never presented evidence of the North's illicit activity.

The US has said the financial restrictions are a separate issue from the nuclear standoff.

Japanese lawmaker Ichiro Aisawa, who visited Beijing on Monday to discuss the nuclear test with Chinese leaders, said he was told by Chinese Vice Foreign Minister Wu Dawei that Beijing had asked both Pyongyang and Washington for flexibility in restarting talks.

Wu, who is Beijing's top nuclear envoy, accompanied China's State Councilor Tang Jiaxuan and Vice Foreign Minister Dai Bingguo on a special mission to Pyongyang last week to deliver a message to the North Korean leader from China's President Hu Jintao.

Chinese Foreign Ministry spokesman Liu Jianchao did not discuss the details of the message, but said Kim and Tang had "in-depth discussions" about the nuclear dispute.