BEIJING, (Reuters):

North Korea set out sweeping demands yesterday for scrapping its nuclear arms and the United States warned that its patience was running out - an inauspicious start to six-party talks after a year-long hiatus.

Addressing the six-party forum at the first talks since the North's Oct. 9 nuclear test, Pyongyang's chief envoy demanded an end to U.N. sanctions and U.S. financial curbs and the grant of a nuclear reactor before it would consider disarmament.

In response to this "exhaustive list", chief U.S. envoy Christopher Hill warned that Washington's patience had "reached its limits".

North Korea's opening speech took a "department store approach", presenting "an exhaustive list of all its demands" and demanding that Washington end its "hostile policy" before Pyongyang would agree to rein in its nuclear programmes, a South Korean official told reporters.

But Hill said that North Korea was at a fork in the road and needed to give ground.

"We don't have the option of walking away from the problem," Hill said. "Their future is very much at stake."

"We do need to see some results," he said.

A one-on-one meeting expected between the U.S. and North Koreans yesterday did not take place.

Washington, along with host China, South Korea, Japan and Russia, want to see North Korea take concrete steps to implement a joint statement agreed in September 2005.

Exchange

In that statement, North Korea agreed in principle to give up nuclear weapons in return for aid and security guarantees.

But North Korean chief negotiator Kim Kye-gwan said his country would not consider implementing the agreement until U.S. and United Nations financial sanctions on it were lifted, the source said.

Washington imposed its financial curbs more than a year ago after determining that Pyongyang was engaged in money-laundering and counterfeiting American currency. The U.N. levelled sanctions in October after condemning the North's nuclear test.

A separate U.S. Treasury Depart-ment delegation is expected to meet the North Koreans to discuss the financial standoff.