Seoul, Aug 17 (DPA) North Korea said Monday that it would reopen its border to South Korean tourists and would allow reunions of divided families after months of rising tensions between the two neighbours.

Trips by South Koreans to Mount Kumgang on North Korea's east coast as well as to the North Korean border town of Kaesong would soon begin again, the state-run Korean Central News Agency reported.

Reunions of relatives divided by the 1950-53 Korean War and the inter-Korean border would restart in October, it added.

The decision was made after impoverished, Stalinist North Korea reached an agreement with South Korea's Hyundai Group, which had been running the tourism programmes until last year.

The South Korean government halted the Kumgang trips after a Southern tourist was shot by a North Korean soldier when she allegedly strayed into a military zone, and the North put a stop to the Kaesong trips amid worsening relations.

The government in Seoul said it regarded the development as 'positive' but made it clear at the same time that the decision to restart the tourism programme must be made between the two governments.

The North Korean news agency also said that Pyongyang and Hyundai had agreed to normalise traffic over the Korean border to an industrial park at Kaesong, which is jointly run by the North and South. Passage for South Korean personnel to the park would be restored, a joint statement said.

'Both sides expressed willingness to improve North-South relations and further develop cooperation for the common prosperity of the nation,' the statement said.

It was issued a day after a meeting between North Korean leader Kim Jong Il and Hyundai chairwoman Hyun Chung Eun in Pyongyang.

Earlier in her trip to the North Korean capital, Hyun had secured the release of a South Korean Hyundai engineer who had been working at the industrial park and had been detained by the North for four and a half months after he criticised its regime.