SEOUL (Reuters) - A U.S. report calling North Korea a sponsor of terrorism shows a “hostile policy” that prevents progress in denuclearization talks, the isolated nation said on Tuesday, as a senior U.S. diplomat was set to arrive in the neighboring South.

FILE PHOTO: Residents hold US and North Korean flags while they wait for motorcade of North Korea's leader Kim Jong Un en route to the Metropole Hotel for the second US- North Korea summit in Hanoi, Vietnam February 28, 2019. REUTERS/Kham

North Korea accused the United States of failing to show flexibility after a breakdown last month in the first talks between their officials since President Donald Trump and North Korean leader Kim Jong Un agreed in June to reopen negotiations.

“The channel of dialogue between the DPRK and the U.S. is more and more narrowing due to such attitude,” North Korean state news agency KCNA said, citing a Foreign Ministry official, and using the country’s official name, the Democratic People’s Republic of Korea (DPRK).

It said a U.S. State Department report on terrorism “proves once again” that U.S. rejection of North Korea indicated “a hostile policy”.

The agency was referring to “Country Reports on Terrorism 2018”, issued last week, which reaffirmed North Korea’s re-designation as a state sponsor of terrorism.

Tuesday’s statement came ahead of a visit to Seoul by U.S. Assistant Secretary of State David Stilwell, who is expected to discuss the stalled talks with North Korea, as well as the South’s decision to end an intelligence-sharing pact with Japan.

“I look forward to productive meetings with your government so we can reaffirm the security alliance as the cornerstone of the peace and security here in the region,” Stilwell told reporters late on Tuesday upon arrival at Incheon airport.

U.S. officials did not describe Stilwell’s agenda in detail, but said he would discuss the strength of the U.S.-South Korea alliance and cooperation across foreign policies.

Washington has urged South Korea to rethink a decision to end an intelligence-sharing agreement scrapped in an escalating political and economic dispute with Japan.

On Tuesday, Kim In-chul, a spokesman for South Korea’s Foreign Ministry, said there was no change in its stance not to renew the intelligence-sharing pact, however.

The top U.S. negotiator in defense cost-sharing talks with South Korea, James DeHart, was also set to arrive in Seoul on Tuesday, a South Korean Foreign Ministry official said.

In April, North Korean leader Kim said the country would give Washington until the end of the year to be “more flexible” in denuclearization talks, but state media have since given only vague warnings about what will happen if the deadline expires.

The United States and North Korea could hold another round of working-level talks as soon as mid-November, South Korean lawmaker Lee Eun-jae said on Monday after a briefing by Seoul’s National Intelligence Service.