SEOUL/WASHINGTON (Reuters) - The United States says it is ready for any contingency after North Korea issued threats of pre-emptive attack and suggested it was poised to restart an atomic reactor central to its suspected drive for nuclear arms.

But as Washington warned Pyongyang it was only isolating itself with its sabre-rattling, there were growing signs the United States was moving toward talks over the second nuclear crisis provoked by the communist state in a decade.

North Korea's state media kept up a stream of alarmist statements on Friday after a senior diplomat told British reporters in Pyongyang that "pre-emptive attacks are not the exclusive right of the U.S.".

Pyongyang portrayed U.S. contingency plans to beef up forces in the western Pacific during any Iraq hostilities as actual deployments that foreshadowed an attack.

"If the U.S. moves to bolster aggression troops are unchecked, the whole land of Korea will be reduced to ashes and the Koreans will not escape horrible nuclear disasters," said the Committee for the Peaceful Reunification of the Fatherland.

"Reckless and arrogant moves of the U.S. imperialists to stifle the DPRK (North Korea) prompt the KPA... to wage a life-and-death battle with the U.S.," said the official Korean Central News Agency (KCNA) about anti-U.S. rallies by the army.

Those dire warnings followed a statement from the energy-starved country's foreign ministry on Wednesday, indicating it was preparing to fire up a reactor it is thought to have used in the past to produce plutonium for weapons.

Washington said the developments were dangerous but no reason to abandon diplomacy to resolve the four-month-old crisis.

"Obviously, the United States is very prepared for robust plans for any contingencies," White House spokesman Ari Fleischer told reporters, adding that President George W. Bush "believes that diplomacy is the way to handle the situation".

U.S. SEEKS "COMPLETE SOLUTION"

South Korean defence authorities said there was no sign of any North Korean troop movements.

Testifying before the Senate Foreign Relations Committee, U.S. Secretary of State Colin Powell said a diplomatic solution was possible. "We have tried to lower the rhetoric."

Powell said no options had been taken off the table, including the military option "although we have no intention of attacking North Korea as a nation ... or invading North Korea."

Bush and his senior foreign policy aides say they are looking for a diplomatic solution, working through U.S. allies in the region as well as China and Russia.

North Korea, however, insists the nuclear issue can only be settled in direct negotiations with the United States.

Washington says it is willing to talk to Pyongyang about dismantling nuclear programmes that include a uranium enrichment plant and a nuclear complex capable of producing plutonium.

The United States said in October North Korea had admitted to enriching uranium in violation of a 1994 accord, under which the North froze its nuclear programme in exchange for two electricity-generating reactors and free fuel.

Since December, North Korea has expelled International Atomic Energy Agency (IAEA) inspectors, withdrawn from the nuclear Non-Proliferation Treaty, restarted the mothballed Yongbyon complex and threatened to resume missile tests.

Last week, U.S. officials said satellite surveillance had shown North Korea was moving fuel rods around the Yongbyon reactor complex, including possibly some of the 8,000 spent fuel rods experts consider a key step in building bombs.

But there was no sign that reprocessing the rods had begun, a step that would enable North Korea to start adding to the arsenal of two bombs the West suspects it has already built.