UPDATE 2-Trump hints at withdrawal from U.S.-South Korea free trade deal

(Adds background on South Korea trade deal, other trade steps

HOUSTON, Sept 2 (Reuters) - President Donald Trump said on Saturday he would discuss the fate of a five-year-old U.S.-South Korean free trade deal with his advisers next week in a move that could see him pull out of the accord with a key U.S. ally at a time of heightened tensions on the Korean peninsula.

Trump made his remarks to reporters while visiting hurricane-hit Houston a day after he spoke with South Korean President Moon Jae-in and struck a deal allowing Seoul access to longer-range missiles and a potential arms sale to Seoul.

The U.S.-Korea Free Trade Agreement (KORUS), hammered out by Trump's Democratic predecessor Barack Obama, has been a frequent target for Trump, who in earlier interviews with Reuters threatened to withdraw from what he called an unequal deal in which Washington runs a trade deficit of almost $28 billion with Seoul.

"It is very much on my mind," Trump said in Houston when asked whether he would be talking about the accord next week.

As Trump considers giving notice to South Korea of U.S. withdrawal from the pact, he faces a potential divide among his advisers. The Washington Post reported earlier that any withdrawal was opposed by his national security adviser H.R. McMaster, Defense Secretary Jim Mattis and National Economic Council Director Gary Cohn.

Trump's comments on Saturday came amid a standoff over North Korea's missile and nuclear tests. North Korea sharply raised regional tension this week with the launch of its Hwasong-12 intermediate-range ballistic missile, which flew over Japan and landed in the Pacific.

Washington wants to change the South Korea deal to help cut its trade deficit with Asia's fourth-largest economy.

South Korean and U.S. officials began talks about possible revisions to the agreement on Aug. 22 but failed to agree on how to move forward. U.S. Trade Representative Robert Lighthizer, South Korean Trade Minister Kim Hyun-chong and the trade pact's joint steering committee participated in a one-day videoconference that ended without a decision on the next steps for possible revisions.

The pact was initially negotiated by the Republican administration of President George W. Bush in 2007, but that version was scrapped and renegotiated by Obama's administration three years later.

Trump has blamed the accord on his 2016 Democratic presidential election opponent, Hillary Clinton, who as Obama's secretary of state promoted the final version of the agreement before its approval by the U.S. Congress in 2011.

Pulling out of KORUS would mark the latest step taken by Trump to abandon the type of international trade agreement that had exemplified world economics for decades.

Days after taking office in January, Trump formally abandoned the Trans-Pacific Partnership (TPP), an ambitious accord brokered by Obama that would have joined a dozen nations from Canada and Chile to Australia and Japan in a complicated array of trade rules.

Trump on Aug. 27 renewed his threat to scrap the North American Free Trade Agreement (NAFTA) between the United States, Canada and Mexico ahead of this week's second round of negotiations on rewriting the 23-year-old agreement.

(Reporting by Steve Holland in Houston; Writing by David Chance; Editing by Steve Orlofsky and Lisa Von Ahn)