NORTH and South Korea have held their first high-level talks in seven years on their fortified border, exploring ways to improve ties while the South and the US geared up for military exercises that have angered the North.

The meeting was set up with unusual speed and great secrecy at the North's suggestion last week, the latest example of conflicting signals coming from North Korea that included an abrupt cancellation of an invitation for a US envoy to visit.

The two sides met at the Panmunjom truce village on the border with no pre-arranged agenda and discussed a range of issues including reunions of families separated during their 1950-53 Korean War, a South Korean official said.

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The North has demanded the South and the US scrap the military exercises, due to start later this month, but both sides have plenty of incentives to seek a deal that could break their long stalemate.

North Korean leader Kim Jong Un is believed to be seeking a visit to China, the North's greatest ally.