North Korea has reopened its border with South Korea to allow tourism and family reunions to resume, in a further sign that the closed nation is moving back towards diplomatic engagement.

The move to reopen cross-border links comes after the chairman of South Korea’s Hyundai group, Hyun Jung-Eun, travelled to Pyongyang last week to negotiate with the North Korean leader Kim Kong-il for the release of an employee detained in March.

The news from the government in Pyongyang has been cautiously welcomed by Seoul. It comes just a week after two US journalists were released following a meeting between Kim Jong-il and the former US President Bill Clinton.

North Korea has been facing international isolation and United Nations sanctions following a series of illegal missile and nuclear tests earlier this year which raised tensions in Korea to their highest level in a decade.

Relations deteriorated further last year after a South Korean tourist was shot and killed by North Korea soldiers in an incident that Seoul still wants to see investigated.

The self-imposed blockade has cut off vital sources of revenue for the impoverished country. But now North Korea has confirmed that Hyundai’s tours to the scenic Diamond Mountain resort on its east coast and ancient sights in the northern city of Kaesong, would restart as soon as possible.

A preliminary date has now been set for early October and the Korean festival of Chuseok for cross-border travel to begin, although South Korea said that official talks would be necessary before the deal was confirmed.

The apparent softening of Pyongyang’s position reflected the economic impact of this year’s sanctions and an understanding that the North’s relationship with the US could only be repaired through first improving ties with Seoul.

North Korea has long struggled to feed its population. But the situation has been aggravated this year by heavy rains, reduced aid and global sanctions due to its missile and nuclear tests.