South Korean President Lee Myung-bak said he may meet North Korean leader Kim Jong-il this year to discuss the nuclear dispute and peninsular peace. "I am always ready to meet with Chairman Kim Jong-il," he said in an interview with the BBC in Davos, where he attended the World Economic Forum.

"However, if we meet, we have to engage in fruitful dialogue and hold enough discussions on the North Korean nuclear issue," Lee added.

He said the two sides should meet for reconciliation and cooperation without any conditions.

"I think the meeting will take place within the year," he said.

The North has rejected any discussion of the nuclear issue with the South, claiming that it should be settled with the United States. The North has justified its atomic weapons ambition over what it called America's hostile policies.

Cheong Wa Dae released the transcript, saying his remark is nothing but a reiteration of his consistent principle.

His top press aide, Lee Dong-kwan, said there is no practical preparation underway for the summit. The two Koreas reportedly explored the possibility of a summit last year but failed to reach an agreement.

The president's remarks came after the North fired artillery shells into waters near the disputed maritime border this week. Seoul's Defense Ministry warned it to stop raising tension.

Lee said the North's actions may be an attempt to press for a peace treaty with the United States as well as resumed talks with South Korea. "This is not a good method," he said.

The North is seen as striving to turn attention to the need of a peace treaty with the United States to replace the armistice that ended the 1950-53 Korean War.

Pyongyang raised the demand again late last year in the face of growing pressure to return to the six-party nuclear disarmament talks which it boycotted in response to UN sanctions against its missile and nuclear tests. The North indicated its willingness to return to the six-party talks in October.

Experts say the North may be seeking to bring the issue to the forefront in order to divert attention from denuclearisation.

In the interview, Lee said North Korea faces economic difficulties because of UN sanctions and may be seeking to get out of the economic pinch by taking the gesture toward dialogue. The communist country, however, appears unwilling to give up its nuclear arsenal, Lee said.

"I believe North Korea is resorting to its past tactic of playing for time and delaying the resolution of the nuclear issue. But such a tactic will no longer work in the international community," he said.

Lee denied speculations about an imminent collapse of the impoverished North.

"North Korea is not on the verge of collapse. Chairman Kim Jong-il has somewhat recovered from his health problems. Though the country faces economic difficulties, it is a long-standing situation," Lee said.

"We should be prepared for a worst-case scenario but we do not believe the North's collapse is impending."

News reports this month that Seoul was stepping up preparation for a North Korean contingency triggered angry reactions from its military.

Lee will return to Seoul today from his two-day trip to Davos, where he made a special address on Thursday to outline Korea's plan for the Group of 20 summit scheduled for November.

On Friday, he met with Israeli President Shimon Peres and discussed cooperation in renewable energy and trade. He said a Korean delegation plans to visit solar and biological energy facilities in Israel in March.

He also met with Cisco Systems chairman and CEO John Chambers and Microsoft co-founder Bill Gates.

Lee and Chambers discussed Cisco's US$30 million project to build its center for IT-based, eco-friendly urban development in Korea.

Lee also discussed corporate social responsibility and aid to underdeveloped countries during a meeting with Gates, chairman of the Bill & Melinda Gates Foundation which is dedicated to bringing innovations in health and learning to the global community.

Lee also had a roundtable session with international business leaders and journalists on post-crisis recovery, green growth and other economic policy issues.