Seoul, May 11 (Reuters): North Korea sharply raised the stakes in its nuclear standoff with regional powers today, announcing it had finished extracting nuclear fuel rods at its Yongbyon plant and taken steps to expand its atomic arsenal.

It was the first time North Korea had effectively confirmed it had been working on its reactor at the Yongbyon nuclear complex north of the capital Pyongyang. Regional powers, notably South Korea, voiced concern and urged it to return to talks designed to end its nuclear ambitions.

The north said in February it was pulling out of the six-country talks and confirmed for the first time it had nuclear weapons. It has since said it would enhance its deterrent force, and Washington fears Pyongyang could be preparing a nuclear test.

“The relevant field of the DPRK has successfully finished the unloading of 8,000 spent fuel rods from the 5 MW (megawatt) pilot nuclear plant in the shortest period recently”, the north’s foreign ministry spokesman said in a English-language version carried by the official KCNA news agency. DPRK is short for the state’s official name, the Democratic People’s Republic of Korea.

Officials in Seoul said in April the north had suspended the operation of its reactor in Yongbyon. Analysts said this would allow it to extract spent fuel rods, which could be turned into weapons-grade plutonium. Outside experts say the north could already have up to eight nuclear weapons. “The DPRK had already declared in December 2002 that it would re-operate the above-said plant and resume the construction of two other nuclear plants”, the north’s spokesman added.

The North did not say whether reprocessing of fuel rods ? necessary to make material for nuclear weapons ? had started.

South Korean officials have said they are more concerned about the possibility of reprocessing than a nuclear test.

Pyongyang and Washington signed the Agreed Framework agreement in 1994 in Geneva to mothball the north’s plutonium-based nuclear programme in return for energy aid, including two proliferation-proof nuclear reactors.

The agreement was effectively broken in late 2002, igniting a new crisis. The US accused the north of running a covert uranium-based programme, a charge Pyongyang denies.

The north’s spokesman said it had resumed operations at the plants frozen under the deal because “the Bush administration theatened the DPRK with nuclear weapons in violation of the agreed framework”.

“Accordingly, the DPRK keeps taking necessary measures to bolster its nuclear arsenal for the defensive purpose of coping with the prevailing situation, with a main emphasis on developing the self-reliant nuclear power industry,” the spokesman said.

He added that construction of two other nuclear power plants had also resumed.

Three rounds of talks involving the two Koreas, the US, Japan, Russia and China aimed at dismantling the impoverished north’s nuclear programmes made little progress. and the process has stalled since the last meeting in June 2004.