North and South Korea agreed in principle Thursday to hold their first official talks for years, a move which follows months of escalated military tensions and comes one day before a US-China summit.
A surprise offer from Pyongyang proposed discussions on a range of commercial and humanitarian issues, from reopening a joint industrial complex to resuming cross-border family reunions.
In an unusually quick reply, South Korea called for minister-level talks on June 12 in Seoul, and urged the North to reopen severed communications channels for working-level discussions from Friday.
"I hope... dialogue will provide a momentum for South and North Korea to improve relations based on mutual trust," said South Korea's Unification Minister Ryoo Kihl-Jae.
China, the North's sole major ally and economic benefactor, has been under pressure from the United States to restrain its neighbour. It responded positively to the news.
"China is happy and welcomes that (North and South Korea) agreed to resume their engagement and dialogue," said foreign ministry spokesman Hong Lei.
US President Barack Obama and his Chinese counterpart Xi Jinping will hold a summit in California on Friday and Saturday, at which North Korea is likely to be a leading topic.
UN chief Ban Ki-moon welcomed the announcement.
"This is an encouraging development towards reducing tensions and promoting peace and stability on the Korean Peninsula," his spokesman said in a statement.
Analysts also welcomed the development but some advised caution, saying the precise nature and agenda of the dialogue might create insurmountable sticking points.
"I think this is an attempt by the North to seize the initiative, but it's premature to say whether the offer is likely to lead to a sincere dialogue," said Yang Moo-Jin, a professor at the University of North Korean Studies in Seoul.
Official contacts between Seoul and Pyongyang have been essentially frozen since South Korea accused the North of torpedoing one of its warships in March 2010 with the loss of 46 lives.
April and May this year saw tensions soar to worrying levels as the North, angered by joint South-US military drills and tighter UN sanctions imposed after its nuclear test in February, threatened pre-emptive nuclear strikes.
The situation has calmed in recent weeks, with both sides circling warily around the idea of opening some sort of dialogue.
The North's proposal, carried in a statement from the Committee for the Peaceful Reunification of Korea (CPRK), said the venue and date for talks "can be set to the convenience of the South side".
Initial subjects for discussion would be the Kaesong joint industrial zone, which was closed at the height of the recent tensions, and the resumption of cross-border tours to the North's Mount Kumgang resort, the CPRK said.
Humanitarian issues such as reuniting family members separated after the 1950-53 Korean War could also be discussed.
The CPRK said a positive response would see the North consider rolling back measures it took when relations went into a tailspin in April, including restoring a cross-border hotline.
South Korean President Park Geun-Hye welcomed the North's gesture and said: "I hope this will serve as a momentum for South and North Korea to solve various pending issues... through dialogue and building trust."
South Korea had already offered working-level talks on Kaesong and Seoul is likely to be wary of agreeing to a much wider-ranging agenda.
While Park has spoken of the need for dialogue, she has made it clear -- with US backing -- that substantive talks would require the North to show commitment to abandoning its nuclear weapons programme.
Pyongyang has repeatedly insisted that its nuclear deterrent is not up for negotiation.
"There could be some trouble in setting the agenda, and it's natural to doubt North Korea's sincerity," said Paik Hak-Soon, an analyst at the Sejong Institute think-tank in Seoul
"But this is a typically strategic change of direction by the North, which puts the ball in the South's court and I think it presents a genuine opportunity," Paik said.
The Kaesong complex, established inside North Korea in 2004, was the most high-profile casualty of the recent tensions.
Born out of the "Sunshine Policy" of inter-Korean reconciliation initiated in the late 1990s by South Korean president Kim Dae-Jung, Kaesong was a crucial hard currency source for the impoverished North.
Operations ground to a halt after the North pulled all its 53,000 workers out in early April.
The Mount Kumgang resort, developed by the South's Hyundai Asan company, opened in 1998 as a symbol of reconciliation.
But Seoul suspended tours by its citizens after a North Korean soldier shot dead a South Korean housewife there in July 2008. In response the North scrapped a deal with Hyundai Asan and seized its properties there.
Hundreds of thousands of family members were separated by the Korean War, and the last temporary reunions took place in 2010.
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