South Korea and the US discussed the North Korean nuclear crisis

President George Bush, on the third leg of a six-nation Asian tour, is heavily promoting a stronger stance against terrorism.

And he was upbeat on the thorny issue of North Korea's nuclear programme, during talks with his South Korean counterpart Roh Moo-hyun on Monday.

APEC FORUM ISSUES Regional security and prosperity Nuclear non-proliferation Restarting failed world trade talks on opening markets Creating a fund for fighting terror

"We're making good progress on peacefully solving the issue with North Korea," Mr Bush said.

Mr Bush and Mr Roh issued a statement calling on North Korea to resume talks on the issue, and "refrain from any action which would exacerbate the situation".

Japanese officials reported a short time later that North Korea may have test-fired a short-range missile on Monday, its first such test in months.

On Sunday, the US leader ruled out the formal non-aggression treaty with the North that Pyongyang is demanding, but hinted that there may be room for some other form of written security pledge.

Expanding on Mr Bush's comments in a speech to business leaders on Monday, US Secretary of State Colin Powell said he would spend the next few days and weeks fleshing out US proposals to defuse the North Korean nuclear crisis with America's allies.

Last week, North Korea threatened to "physically display" its nuclear deterrent which some analysts interpreted as a threat to test a nuclear weapon.

Controversy

The BBC's Chris Hogg in Bangkok says the US emphasis on security has upset some Apec members, who believe the organisation should stick to its stated mission of promoting free trade.

BUSH IN ASIA Rob Watson's reporter's diary Apec summit braced for trade clashes

Pacific Rim leaders plan to restart the World Trade Organisation talks which stalled in Cancun, Mexico, last month.

But the US insisted that terror was threatening regional economies.

"Every nation, every economy represented here, every business, every leader, every one of us is a potential target for terrorist activities," Mr Powell said.

Apec members are also due to discuss the need for a better co-ordinated response to Sars, should the disease return, and to build up defences against other infectious diseases or bio-terrorism attacks.

President Bush is due to address the summit with an overview of Washington's role in the Asia-Pacific region.

He is also expected to use the forum to urge Asian leaders to help rebuild Iraq.

Nuclear threat

Mr Powell reiterated that impoverished North Korea must give up its nuclear programme, which is incurring sanctions and stalling diplomatic relations.

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"You cannot eat plutonium," he said.

But he repeated Mr Bush's reassurances on Sunday that the US was not about to attack North Korea.

He said that instead, Washington had presented its allies with "expanded ideas" about how to give security assurances to Pyongyang.

In addition to his meeting with Mr Roh, Mr Bush has discussed the issue with Chinese President Hu Jintao and Japanese Prime Minister Junichiro Koizumi.

But Mr Powell stressed that Pyongyang would first have to make clear to the international community in a verifiable way that it had ended the country's nuclear programme.

The question of who makes the first move has stalled negotiations between the US and North Korea for several months.