In a second day of Cabinet-level talks in Pyongyang, South Korean delegates again demanded that North Korea abandon any atomic weapons development, citing a 1992 agreement to keep the Korean Peninsula nuclear-free. 

The North refused to discuss the nuclear issue. 

"The Northern side reiterated that the nuclear issue is a matter between the North and the United States," said a statement from the South Korean government. "But they said they wanted to resolve the matter peacefully." 

The talks, which began Sunday, are scheduled to end Tuesday. 

A senior U.S. official said North Korea, during talks in Beijing last week, claimed to have atomic weapons that it might test, sell or use, depending on U.S. actions. Seoul officials said North Korean delegates have not confirmed the account. 

Instead, they reiterated the North made a "new, bold" proposal to the United States during the Beijing talks, but they did not elaborate, South Korean spokesman Shin Eun-sang said. 

U.S. officials did not reveal the North's proposal, but South Korea's JoongAng Ilbo newspaper, quoting unidentified diplomatic sources, reported Monday that North Korea proposed to give up its nuclear programs in return for a nonaggression treaty and normalization in "political and economic relations with the United States." 

During Sunday's talks, North Korea called for "united efforts of all the Koreans" to "reject the unilateral strong-arm action of foreign forces ... and prevent the danger of war," said the North's official news agency KCNA. 

Such remarks reflect the North's long-standing policy of driving a wedge between the South and its main ally, the United States. 

The North tried to shift the focus of the talks to linking cross-border railways and other economic projects with South Korea that are part of a reconciliation process that grew out of a historic North-South summit in June 2000. 

During a visit Sunday to an unidentified "front-line unit," North Korean leader Kim Jong Il was satisfied that his soldiers were ready to repel "any surprise attack of the enemy at one stroke," and gave "guidelines in further increasing the unit's combat capability," KCNA said. 

KCNA said North Korean soldiers were determined to "become human bombs in safeguarding the headquarters of the revolution and wipe out any invaders at one stroke." 

Washington believes North Korea has one or two atomic bombs and may be trying to make more. North Korea has indicated that it would never abandon its nuclear programs unless Washington signs a nonaggression treaty. 

The Bush administration has ruled out such a treaty, but U.S. officials have said some form of written security guarantee may be possible. 

During the Beijing talks, U.S. officials said North Korea claimed it had reprocessed 8,000 spent nuclear fuel rods - a key step in producing nuclear weapons that could yield several more bombs within months. 

The White House has said it will confer with allies about whether to seek U.N. sanctions against North Korea. Pyongyang says it would consider international sanctions a "declaration of war." 

Washington has said it wants the "verifiable and irreversible" elimination of the North's nuclear weapons programs. 

Last week's talks in Beijing were the first high-level U.S.-North Korean contact since nuclear tensions spiked in October, when Washington accused Pyongyang of having a secret nuclear program in violation of a 1994 pact.