Reconciliation talks between North and        South Korea appeared close to collapse Friday over Seoul's demand that its rice aid be linked to Pyongyang's denuclearisation.Chief negotiators from both sides sat down at 9:00 am (0000 GMT) for last-minute discussions over the rice aid, but South Korean officials sounded pessimistic.

"The atmosphere is not good. After the talks, we will know what will happen afterwards," Kim Nam-Sik, spokesman for the South's unification ministry, told reporters.

The South has refused to dispatch its first shipment of rice until the North begins honouring a six-nation disarmament deal reached in February.