North Korea has begun moving fresh fuel rods into a reactor, a key step in reactivating nuclear facilities that could eventually produce weapons, a South Korean news agency said Thursday.

North Korea, however, denied it was planning to develop nuclear weapons by moving to restart the mothballed plant, which is at the center of diplomatic standoff with the United States.

"Our measure has nothing to do with plans to develop nuclear weapons. Our republic constantly maintains an anti-nuclear, peace-loving position," state-run Radio Pyongyang said in a commentary Thursday. The report was carried by South Korea's Yonhap news agency.

North Korean radio said the facilities were being restarted in order to generate electricity because the United States had reneged on a 1994 deal to provide energy sources if it froze the plants. Washington said it cut off oil shipments to the energy-starved nation to pressure it into abandoning a separate nuclear weapons program based on uranium enrichment.

In Seoul, Yonhap quoted an unidentified South Korean government official as saying the communist North began moving fuel rods into the five-megawatt reactor at its main nuclear center in Yongbyon, 50 miles north of its capital, Pyongyang.

The report followed an announcement Wednesday by officials in South Korea that the North has let the U.N. International Atomic Energy Agency send more inspectors to its nuclear facilities, even as communist engineers move freely around a reactor in violation of arms control agreements.

The agency has three inspectors staying in North Korea checking the activities of North Koreans. The number of inspectors was increased from two to three this week.

In a confrontation with the United States, North Korea on Dec. 12 decided to restart its frozen nuclear facilities and then removed U.N. monitoring seals and cameras from the reactor and three other key nuclear facilities.

"We've confirmed through IAEA that North Korea began moving fuel rods into the reactor on Wednesday," Yonhap quoted its source as saying.

An IAEA spokesman at the agency's headquarters in Vienna, Austria, could not be reached for comment early Thursday.

The Yonhap report said that there were no signs that the North Koreans were using spent fuel rods, a step that could mark a move toward building a bomb. U.S. officials say that that the North's 8,000 spent rods hold enough weapons-grade plutonium to make several nuclear bombs. North Korea is suspected of already having at least one atomic bomb.

South Korean President Kim Dae-jung said Thursday that his government will never tolerate the North's efforts to develop nuclear weapons but stressed that the issue should be resolved peacefully through dialogue.

"We must closely cooperate with the United States, Japan and other friendly country to prevent the situation from further deteriorating into a crisis," Kim told a special Cabinet meeting.

In the Yonhap report, the South Korean official did not say whether North Korea has actually begun loading the fuel inside the Soviet-designed reactor core, which can produce weapons-grade plutonium.

North Korea's willingness to publicly flout its international commitments suggests it is trying to force itself onto Washington's agenda to win an oft-stated goal: talks with its longtime foe about a nonaggression treaty.

Possibly as part of that strategy, North Korea has stepped up its anti-American rhetoric in recent days, warning that U.S. policy was leading the region to the "brink of nuclear war."

The Bush administration, however, has rejected negotiations with North Korea unless it abandons nuclear activities and says the North's moves to reactivate the nuclear reactor at Yongbyon amount to blackmail.

The standoff has raised fears of another nuclear crisis on the Korean Peninsula like one in 1994 that some experts say nearly escalated into war.

The United States fears the plant -- whose operations were frozen in a deal that averted the earlier crisis -- could be used to make nuclear weapons and has urged the North not to reactivate it.

IAEA's director, Dr. Mohamed ElBaradei, has said that without the seals and other safeguards, his agency cannot guarantee that North Korea is not diverting nuclear material for the production of weapons.

Washington's preparations for a possible war with Iraq may have given new urgency to North Korea's demands for a nonaggression treaty, though the destitute North is also believed eager to extract economic benefits from any deal.

U.S. officials say North Korea's claim that it needs the facility to generate electricity is false because there is no use for plutonium other than trying to build a nuclear bomb.

In Russia, which has maintained friendly ties with the North Korean regime in Pyongyang, Deputy Foreign Minister Alexander Losyukov expressed concern over the North's nuclear program, saying it "negatively affects the situation on the Korean Peninsula."