As Hill wound up an Asian tour aimed at getting six-nation disarmament talks back on track, media reports said North Korea had launched a short-range missile, the latest in a string of small-scale tests.

Hill, the chief US negotiator with North Korea, said Tuesday that North Korean money at the heart of a standoff had finally been deposited at a bank in Russia on Tuesday.

"To my understanding, today it was deposited in North Korean accounts in their bank accounts in Russia," Hill told reporters in Tokyo, his last stop in the region after visits to Mongolia, China and South Korea.

"We're very pleased we've passed this banking issue," Hill said. "I am hopeful that we can get to six-party talks of some kind in early July."

In Seoul, South Korean President Roh Moo-Hyun echoed Hill's remarks, saying: "The North Korean nuclear issue definitely seems to have entered the settlement stage."

North Korea agreed in February to shut down its Yongbyon reactor, the source of raw material for bomb-making plutonium, in a six-nation deal in exchange for badly needed fuel aid and diplomatic benefits.

But the cash-strapped regime refused to meet an April deadline to comply as it had not gained access to the frozen funds held at the Banco Delta Asia in the Chinese territory of Macau.

The 20 to 25 million dollars had been blacklisted in 2005 on US suspicions of money-laundering and counterfeiting.

North Korea also cited the row to boycott six-nation talks for more than a year, during which it tested an atom bomb in October.

Hill said North Korea now had to comply with the February agreement.