North Korea may have started to shut down its nuclear reactor and source of its weapons-grade plutonium, South Korean media reported on Tuesday.

US spy satellite photographs showed increased activity around the North's Soviet-era Yongbyon reactor, major daily newspaper Dong-A Ilbo quoted a diplomatic source as saying.

"Washington thinks it is highly likely that those activities are a part of North Korea's operations to close down the nuclear facility," the source with access to intelligence information told the paper.

Yonhap news agency had a similar report.

South Korean government officials declined to comment on the reports.

North Korea missed an April 14 deadline set in a February disarmament deal to start closing the reactor and invite UN nuclear inspectors into the secretive state in return for fuel aid.

In an another separate report, South Korea may suspend rice shipments to North Korea to ratchet up pressure on the North to comply with its nuclear disarmament pledges after it missed a deadline to shut an atomic reactor.

"We can't just ignore and do nothing if ... North Korea doesn't take initial steps" to disarm as agreed in February at six-nation nuclear talks, an unnamed South Korean official said Monday, according to the Dong-a Ilbo newspaper. Other dailies carried similar reports.

The two Koreas were set to begin talks Wednesday in Pyongyang to discuss the North's request for 400,000 tons of rice.

South Korea periodically sends rice and fertilizer to the impoverished North, which has relied heavily on foreign handouts since the mid-1990s when natural disasters and mismanagement devastated its economy and famine led to the deaths of as many as 2 million people.

An official at South Korea's Unification Ministry, which deals with North Korean affairs, said "nothing has been decided yet." The official spoke on customary condition of anonymity.

It wasn't clear if the official's comment reflected a step back from the ministry's earlier position that South Korea would give rice to the North even if the shutdown deadline was missed.

North Korea had until Saturday to shut down its nuclear reactor, but failed to do so because of a delay in the release of its $25 million in funds frozen in a Macau bank, which was blacklisted by the United States for allegedly assisting the country in money-laundering and counterfeiting.

The North has said it won't take steps to disarm until all the funds are released.

Meanwhile, Macau's Banco Delta Asia said Monday it had filed a legal challenge to Washington's decision to cut it off from the US financial system. The bank told the US Department of Treasury that its accusations "lacked specific facts" and they were motivated by politics, the bank said in a statement.

It did not elaborate, saying only the US move was "politically motivated since it was based on disputes between the United States and North Korea." The bank has repeatedly denied knowingly helping in North Korea's alleged illicit activities.

In Washington, Treasury Department spokeswoman Molly Millerwise said the US "has confidence in the merits of its action against Banco Delta Asia, as demonstrated by the information put forth in the final rule," which blacklisted the bank.

A Russian official said Monday that the US failure to allow the North to have access to its funds had stalled progress on the February agreement.

Under that accord between North Korea and five other nations - South Korea, China, Japan, Russia and the US - the North was also to receive 50,000 tons of heavy fuel oil to be donated by the South in return for shuttering its reactor.

"There won't be any progress until the North Korean side says that it has received the money," Deputy Foreign Minister Alexander Losyukov said, according to the Interfax, ITAR-Tass and RIA Novosti news agencies.

Also Monday, Japan said it was "not appropriate" to set a new deadline for the reactor shutdown and instead insisted that the North respect its promises.

"It is extremely regrettable that North Korea did not follow the agreement," said chief Cabinet spokesman Yasuhisa Shiozaki. "North Korea is in a position to immediately implement the agreement."

Before leaving Beijing on Sunday, the main US nuclear negotiator said Washington would give the North a "few more days" to act.

"We're not happy that the (North) essentially has missed this very important deadline," Assistant Secretary of State Christopher Hill told reporters. "We're obviously going to be watching the situation very closely in the coming days."

The North has made no official comment has come since the deadline, with the country consumed in celebrations for one of its main holidays: the birthday of the country's founder Kim Il Sung, who died in 1994.