TOKYO - A financial dispute that has held up North Korea's pledge to shut down its nuclear reactor could be nearing a breakthrough amid a news report that the long-awaited transfer of frozen North Korean funds will start Thursday.

Assistant Secretary of State Christopher Hill testifies on Capitol Hill in Washington, Wednesday, June 13, 2007, before the House Foreign Affairs Committee hearing on the US South Korea free trade agreement. [AP]

Kyodo News agency, citing unidentified Macau government authorities, said the transfer of the $25 million at Banco Delta Asia would begin by the end of the business day.

Macau's Monetary Authority spokeswoman Wendy Au declined to comment on the report, but she said that an announcement might be made later Thursday. Officials at Banco Delta Asia were not immediately available for comment.

There have been numerous reports of progress on the bank dispute that have turned out to be unfounded. However, optimism has grown recently with officials in Washington and Seoul saying the dispute was nearing a solution.

"I can go out on a limb and say I am hopeful that we will have some news for you very soon on this," US Assistant Secretary of State Christopher Hill, the top American delegate to the North Korean nuclear talks, told reporters Wednesday.

South Korea's foreign minister also said Wednesday in Seoul that the negotiations were nearing their conclusion.

"We are in the final stage of solving the (banking) issue with related countries taking various concrete measures," Song Min-soon said at his weekly press briefing. "But it is too soon to say at exactly what time the issue will be resolved."

North Korea has refused to move forward on a February pledge to start dismantling its nuclear program until it receives the $25 million that had been frozen by the Macau bank, which was blacklisted by the United States.

Washington accused the bank of complicity in money laundering by DPRK, but gave its blessing for the funds to be freed to win progress on the nuclear issue. While the money has been freed for release, North Korea has not withdrawn it, apparently seeking to prove the funds are now clean by receiving them through an electronic bank transfer.

Kyodo reported Thursday that the money would first go through the New York branch of the US Federal Reserve and then be sent to the Russian central bank before being deposited into a North Korean account at a bank in Russia.

On Wednesday, the Russian government expressed support for a plan to resolve the dispute by funneling North Korean funds through a Russian bank, and said it was studying legal aspects of the issue.