NORTH Korea announced yesterday it had agreed to resume reunions of families separated by the border with South Korea and restart stalled tourism ventures in its latest gesture of conciliation after nearly 18 months of rising tensions.

North Korea, however, said separately it was putting its army on “special alert” because of South Korea’s joint military drills with the United States this week, a sign that hostility and distrust remains high between the rival countries.

The Korean Central News Agency said in a dispatch early yesterday that North Korea and South Korea’s Hyundai Group conglomerate agreed to restart tours to the scenic Diamond Mountain resort and ancient sights in Kaesong in North Korea.

The tours to the mountain were halted last year by South Korea after one of its tourists was fatally shot there – an incident Hyundai Chairwoman Hyun Jung-eun quoted North Korean leader Kim Jong Il as saying “will never happen again.”

Hyundai has been the main South Korean investor in North Korea. Hyun and Kim held talks in Pyongyang on Sunday.

Both tours to Diamond Mountain and Kaesong have been run by Hyundai’s North Korea business arm, Hyundai Asan.

Kim had “a cordial talk with Hyun” and “complied with all her requests,” according to the KCNA report.

South Korea’s Unification Ministry said yesterday it would disclose its position on whether to accept North Korea’s announcement after Hyun returned home later in the day and debriefed officials.

Ministry spokeswoman Lee Jong-joo said government-level talks between the two Koreas were necessary to resume stalled projects like the Diamond Mountain tours and family reunions.

The KCNA said North Korea also agreed to resume reunions of families separated by one of the world’s most heavily fortified borders at Diamond Mountain on this year’s annual Chuseok autumn harvest holiday on October 3. Chuseok is one of the two biggest holidays celebrated in both Koreas and is equivalent to Thanksgiving in the US.