The White House has decided to impose sanctions on a North Korean company for selling Scud missile parts to Yemen, The New York Times has reported, citing US officials.

The sanctions are a symbolic gesture since no trade relationship exists between the US and North Korea.

We are making a statement to the world that North Korea engages in dangerous and illicit activity

US official

But the move is significant, coming at a time when there seemed to be a thaw in relations between the two countries.

North Korea also seems to be reaching out diplomatically. The Stalinist state is due to hold crucial rapprochement talks with both South Korea and Japan over the next week.

Strong message

The Bush administration is reported to have expressed concern over the sale to Yemen. But it decided not to impose any punishment on the country, which is an ally in its war on terror.

"We are making a statement to the world that North Korea engages in dangerous and illicit activity," one unidentified US official said.

"We are making it clear that if you are a friend of the United States or civil society these are characters you do not want to be associated with," he added.

The components reportedly were for Scud missiles

According to the New York Times report, the Scud missile components were sold to Yemen during the administration of former president Bill Clinton.

The Washington Post also carried the story, although it did not identify to which country the components were sold.

It said the White House intends to officially announce its sanction decision on Friday and says that the sanctions are expected to last for two years.

Technology targeted

The sanctions focus on the Changgwang Sinyong Corporation, the marketing arm for Pyongyang's missile export programme.

They apply to missile technology electronics, space systems or equipment and military aircraft.

In his State of the Union address in January Mr Bush named North Korea as part of an "axis of evil", alongside Iran and Iraq.

But since then relations have started to improve.

Charm offensive

In July US Secretary of State Colin Powell met with the North Korean Foreign Minister Paek Nam-sun on the sidelines of an Asian regional meeting.

It was the highest-level contact with North Korea since Mr Bush was elected.

Last week North and South Korea delegates held talks for the first time since relations were soured by a deadly naval battle in June.

And in Pyongyang, Japanese representatives from the Red Cross met with their North Korean counterparts in a meeting that could pave the way to diplomatic relations between the two countries.