U.S. President Barack Obama discussed luring North Korea back to nuclear talks and finishing by next year a delayed trade pact with Seoul in a meeting with President Lee Myung-bak on Thursday at the end of his Asian tour.

Obama, who arrived in Asia last week and flies home later in the day, and Lee have been putting pressure on the destitute North by targeting its finances and telling Pyongyang it will win massive rewards if it abandons its atomic ambitions.

North Korea rattled regional security just ahead of Obama's first visit to Seoul since taking office by sparking a naval fight with the South and telling the world early this month it had produced a fresh batch of arms-grade plutonium.

But Pyongyang has muffled the rhetoric since Obama began his trip to Asia a week ago.

The summit in Seoul is expected to be less problematic than meetings in China where Obama barely bridged divides on trade, currency policy and Tibet.

"Obama and Lee will send a clear message that they want a comprehensive settlement with North Korea and there is no divide in how they see the issue," said Cheong Seong-chang, an analyst at the Sejong Institute think tank near Seoul.

Thousands of cheering South Koreans lined the streets of downtown Seoul as Obama's motorcade drove by.

Obama and Lee are expected to hold a news conference at 0330 GMT.

The Obama administration plans to send its first envoy to North Korea in the next few weeks to revive comatose six-way talks on ending the North's nuclear ambitions in return for massive aid to repair its failed economy and better global standing for the largely ostracised state.

Analysts said Obama would not have agreed to the visit unless his government was given some reassurance that Pyongyang would respond by reviving the broader disarmament dialogue.

One area of conflict may be a free-trade deal struck two years ago under President George W. Bush and yet to be approved by legislatures in either country. Estimates said it could increase their $83 billion a year in two-way trade by about $20 billion.

Obama said on Wednesday he wanted to iron out remaining issues with Lee on the trade pact and that the agreement could benefit U.S. exporters.

"I want to get the deal done," Obama said in an interview with Fox News.

Asked if he thought passage of the agreement could be completed next year, Obama said: "The question is whether we can get it done in the beginning of 2010, whether we can get it done at the end of 2010. There's still some details that need to be worked out."

South Korea insists it will not renegotiate the deal, the biggest trade pact for the United States since the NAFTA accord of the mid-1990s with its immediate neighbours. But Seoul has left the door open for discussions for side deals on areas such as the auto trade.

South Korea removed a potential source of friction by saying at the end of October it would dispatch a security contingent of police and troops to Afghanistan to help support the U.S.-led mission there.