BEIJING - The top US nuclear envoy said Friday that he felt a dispute over North Korean funds held in Macau that had possibly threatened international efforts to rid Pyongyang of its nuclear weapons had been resolved.

US Assistant Secretary of State Christopher Hill, right, arrives at the International Beijing airport in China, Wednesday March 14, 2007. [AP]

Washington promised to resolve its blacklisting of the tiny Banco Delta Asia and the freezing of $24 million in North Korean deposits as an inducement to Pyongyang to rejoin international talks on its nuclear ambitions.

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A US Treasury Department decision Wednesday ordering US banks to sever ties with Banco Delta Asia appeared to fall short of expectations.

But US Assistant Secretary of State Christopher Hill said he was confident North Korea would fulfill its obligations to close its main nuclear reactor in exchange for energy aid and political concessions.

"I think they want assurances that the Banco Delta Asia issues is resolved and we can give them those assurances that it is resolved."

Meanwhile, the UN top nuclear inspector told envoys to international arms talks that Pyongyang reassured him of its commitment to a February agreement to take initial steps toward disarmament, a Japanese official said. North Korea gave assurances it would cooperate with International Atomic Energy Agency, the official said.

However, IAEA head Mohamed ElBaradei, who visited Pyongyang earlier this week, said the North also stressed that other countries at the arms talks must be committed to the process - repeating its demands for the lifting of financial sanctions, a Japanese delegation member said on condition of anonymity due to sensitivity of the issue.

North Korea has yet to react publicly to the Treasury Department's decision. The Macau bank has been blacklisted by the US Treasury Department since September 2005 for its alleged complicity in North Korean money laundering.

The North boycotted nuclear talks for more than a year over the bank issue and conducted its first nuclear test in October.

Banco Delta Asia said Friday that it would challenge the decision and denied any knowledge of money laundering by North Korea.

Stanley Au, chairman of Delta Asia Group (Holdings) Ltd., which oversees the bank, said the North Korean accounts were closed in 2005 after Washington blacklisted the bank.

"We are not prepared to resume activity with them (North Korea) for the future," Au said at a news conference.

The US, which spent 18 months investigating the bank, said it will share its findings this week with the Macau government, a move that would pave the way for overseas authorities to release any North Korean money that had been frozen.

Under a Feb. 13 agreement, North Korea pledged to shut down its main nuclear reactor and processing facility and allow UN inspectors in by April 14.

In return, North Korea would receive energy and economic assistance and a start toward normalizing relations with the US and Japan.

North Korea is eventually to receive assistance worth 1 million tons of heavy fuel oil if it fully discloses and dismantles all nuclear programs.

Working groups to implement the pact are meeting in Beijing this week ahead of a full session talks Monday. The negotiations involve China, Japan, Russia, the United States and the two Koreas.