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Trump says North Korea potential is 'awesome' but experts warn against hasty peace deal

Trump says North Korea potential is 'awesome' but experts warn against hasty peace deal
U.S. President Donald Trump arrives at Noi Bai Airport for the US-DPRK summit in Hanoi, Vietnam February 26, 2019. REUTERS/Kham/Pool -
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(Reuters) -

0240 GMT: TRUMP SEES AWESOME POTENTIAL FOR NORTH KOREA

U.S. President Donald Trump said North Korea had "awesome" potential to thrive if it would denuclearize.

In a Twitter message ahead of his summit with North Korean leader Kim Jong Un in the Vietnamese capital Hanoi, Trump said: "Vietnam is thriving like few places on earth. North Korea would be the same, and very quickly, if it would denuclearize.

"A great opportunity, like almost none other in history, for my friend Kim Jong Un. We will know fairly soon."

The White House said Trump would meet Kim at the French-colonial-era Metropole Hotel in Hanoi at 6:30 p.m. (1130 GMT) and have a 20-minute one-on-one conversation before a dinner scheduled to last just over an hour and a half. Both arrived in the Vietnamese capital on Tuesday.

(The Metropole hotel is seen ahead of the North Korea-U.S. summit in Hanoi, Vietnam: https://tmsnrt.rs/2VmjrnF)

0212 GMT: EXPERTS URGE CAUTION ON PEACE DEAL

Analysts however cautioned that a peace deal between the two sides would not end the North's pursuit of nuclear weapons.

Officials and experts have said the two leaders are likely to sign a peace declaration to symbolically end the 1950-53 Korean War. Other agreements could be to open liaison offices in each other's countries and adopting denuclearisation measures, such as allowing inspectors to observe the dismantlement of North Korea's Yongbyon nuclear reactor, in exchange for a loosening of U.S. economic sanctions against Pyongyang.

The London-based International Institute for Strategic Studies said a peace deal needed to be carefully worked out, otherwise it could lead to regional security risks. "Peace between Washington and Pyongyang might contribute to an untimely withdrawal of U.S. forces from South Korea, encouraging dangerous misconceptions in Pyongyang," it said.

Daniel Russel, the top U.S. diplomat for Asia until 2017, said: "A peace treaty that leaves in place the arsenal of North Korean chemical, biological, and nuclear weapons that directly threaten Americans and our allies is not much of a peace treaty.

"The path to real peace on the Korean Peninsula begins with irreversible steps by North Korea to eliminate its nuclear weapons program."

0215 GMT: MARKETS QUIET BUT MAY REACT POSITIVELY

Singapore's DBS said news about details of denuclearisation and the possible easing of North Korea sanctions would be taken positively by markets.

Nomura analyst Chetan Seth said in a note: "If we somehow see some progress towards denuclearisation of the Korean Peninsula, this could be another positive catalyst for Asian equities, particularly Korea."

However, Nick Twidale, Sydney-based analyst at Rakuten Securities Australia, said although the summit is expected to be positive with regard to denuclearisation, "little is expected in terms of market moving updates".

(Graphic: Markets vs North Korea's provocations - https://tmsnrt.rs/2BWJQkN)

0220 GMT: SUMMIT VENUE HOSTED CHAPLIN ON HIS HONEYMOON

Trump and Kim will meet on Wednesday at a storied French colonial-era hotel once used by the North Vietnamese government to house foreign guests during the Vietnam War.

The Sofitel Legend Metropole Hanoi has hosted dignitaries and celebrities from Charlie Chaplin on his honeymoon in 1936 to "Hanoi Jane" Fonda during her 1970s anti-war campaign and even Trump himself on a recent visit to the Vietnamese capital.

Angelina Jolie and Brad Pitt stayed in the 118-year-old hotel in 2007. The Metropole also hosted Graham Greene, who wrote part of his seminal 1955 work, "The Quiet American" there, and numerous war correspondents during the 20-year-long Vietnam War that ended in 1975.

EXEMPTING S.KOREA FROM N.KOREA SANCTIONS A POSSIBLE CONCESSION - ANALYST

One possible concession that could be offered to North Korea at the summit is exempting South Korea from sanctions imposed on the North for pursuing nuclear weapons, said Brian Meyers, a professor at South Korea's Dongseo University.

"I urge everyone to focus less on the Pyongyang-Washington axis and more on the Pyongyang-Seoul axis because that's where the action is," Meyers said on the Reuters Global Markets Forum.

He said the key issue to be decided at the summit was whether the North would agree to close or allow monitoring of its Yongbyon nuclear facility. "This would not necessarily solve the problem of the North's existing nukes but it would still be a significant enough concession to enable the Americans to loosen sanctions," Meyers said.

Kim Young-hwan, an analyst at KB Securities in Seoul, said there was unlikely to be a strong reaction in South Korean financial markets to any loosening of sanctions.

"Stocks with exposure to inter-Korean business exchanges will benefit and post some gains in the following months," Kim said. "But their weighting on the broad index is just around 4 percent, and therefore, you can't expect any significant rally for the whole market even if there's a material agreement at the summit."

(To see an interactive graphic on inter-Korean relations, click https://tmsnrt.rs/2KdXMcS)

Other summit stories:

Live: North Korea - Reuters social media blog https://www.reuters.com/live/north-korea

(Hanoi newsroom, Swati Pandey, David Brunnstrom, Karishma Singh, Raju Gopalakrishnan)

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