North Korea, U.S. May Discuss Sanctions on Sidelines of Six-Party Nuke Talks

International talks on North Korea's nuclear program entered a second day Tuesday, with delegates from Washington and Pyongyang expected to discuss a key sticking point on the sidelines — U.S. financial restrictions against the reclusive regime.

All chief envoys met in a closed session at the Chinese state guesthouse where the talks are being held.

Meanwhile, a North Korean delegation led by O Kwang Chol, president of the North's Foreign Trade Bank of Korea, arrived Tuesday in Beijing for separate talks on the financial issue.

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North Korea had refused to return to the multinational talks in anger over the U.S. blacklisting of a Macau bank where Pyongyang deposited some US$24 million, alleging the bank was complicit in the North's counterfeiting of US$100 bills and money laundering to sell weapons of mass destruction.

On Monday, the North again called for Washington to lift those restrictions and demanded U.N. sanctions imposed for its nuclear test explosion be lifted, according to a summary of its opening statement released by one of the delegations.

Daniel Glaser, the U.S. Treasury Department's deputy assistant secretary for terrorist financing and financial crimes, was in Beijing for talks on the financial issue with the North Koreans, but a schedule for discussions had not been set yet, the U.S. Embassy said.

During the opening talks Monday, North Korea insisted it be treated as a full-fledged nuclear power. But the United States has said time was running out for Pyongyang to dismantle its nuclear arsenal and threatened more sanctions.

U.S. envoy Christopher Hill told reporters Tuesday morning that so far "not too much progress" had been made toward implementing an agreement reached last year.

The North pledged in September 2005 to abandon its nuclear arms program in exchange for economic aid and security guarantees, and Hill said the other countries at the talks hoped to lay out a plan to form working groups to discuss its implementation.

The resumption of the talks — consisting of China, Japan, Russia, the United States and the two Koreas — came after a more than 13-month break during which the communist North test fired a new long-range missile in July and then set off an underground atomic blast Oct. 9.

Japanese negotiator Kenichiro Sasae told reporters Tuesday that if the U.S. and North Korea meet to discuss the financial restrictions it might help lift the mood of the talks.

"It is extremely regrettable that North Korea claims to be a nuclear weapons state," Japan's chief Cabinet spokesman Yasuhisa Shiozaki said Tuesday in Tokyo. "While the comments were expected, nonetheless, the discussions should be more positive to bring about progress."

The North also renewed its demand Monday that it be given a nuclear reactor for electricity generation and also that its struggling economy get other help in meeting its energy needs until the reactor is built.

Pyongyang repeated its assertion Monday that it be considered a nuclear weapons power and that the talks be transformed into negotiations over mutual arms reductions in which it would be accorded equal footing with the United States. If its demands aren't met, the North said, it would increase its nuclear arsenal, according to the summary.

But the United States and other countries stressed the main focus would be on getting the North Korean regime to give up atomic arms.

"We would like denuclearization via a diplomatic negotiation. If they don't want that, we're quite prepared to go the other road ... which is a pretty tough road," Hill said, implying North Korea could face further international sanctions.

The latest North Korean nuclear crisis erupted in 2002 after U.S. officials said the North had admitted to a secret nuclear program in violation of a 1994 disarmament deal, leading to the communist nation's withdrawal from the Nuclear Nonproliferation Treaty.

North Korea is believed to have enough radioactive material to make about a half-dozen atomic bombs, and its main nuclear reactor remains in operation to create more weapons-grade plutonium.

Complete coverage is available in FOXNews.com's North Korea Center.