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UPDATE 1-Stalled talks with U.S. not good for N.Korea, S.Korea tells China

(Recasts, adds details, comments from South Korean president, paragraphs 5-7)

BEIJING, Dec 23 (Reuters) - Stalled denuclearisation talks and a recent flare-up in tension between the United States and North Korea are not beneficial for Pyongyang, South Korean President Moon Jae-in told Chinese President Xi Jinping in Beijing on Monday.

North Korea has set a year-end deadline for the United States to change what it says is a policy of hostility amid a stalemate in efforts to make progress on their pledge to end the North's nuclear programme and establish lasting peace.

North Korean leader Kim Jong Un and U.S. President Donald Trump have met three times since June 2018, but there has been no substantive progress in dialogue while the North demanded crushing international sanctions be lifted first.

On Saturday, state media said the United States would "pay dearly" for taking issue with the North's human rights record and said Washington's "malicious words" would only aggravate tensions on the Korean Peninsula.

Moon told Xi that he highly appreciated China having played an important role on the Korean issue, Moon's office said in a statement.

"The recent situation where dialogue between North Korea and the United States was suspended and tension has been rising on the peninsula is never beneficial for not just our two countries but also North Korea," Moon said.

"I hope that we work together more closely so that this rare opportunity will bear fruit."

Moon is visiting China for a trilateral meeting between him, Japanese Prime Minister Shinzo Abe and Chinese Premier Li Keqiang in the southwestern city of Chengdu.

Abe is due to meet Xi in Beijing later in the day before he also heads to Chengdu.

Though various economic matters will also be on the agenda - as well as tensions between Seoul and Tokyo - North Korea appears likely to dominate the agenda.

U.S. special envoy for North Korea Stephen Biegun met with two senior Chinese diplomats during his two-day visit to Beijing last week, following similar meeting in South Korea and Japan days earlier, as diplomats make last-ditch attempts to prevent new confrontation.

Beijing, jointly with Russia, proposed last week that the United Nations Security Council lift some sanctions in what it calls an attempt to break the current deadlock and seek to build support.

But it's unclear whether Beijing can convince Seoul and Tokyo to break ranks from Washington, which has made its opposition clear and can veto any resolution.

Though South Korea sees China as instrumental in reviving negotiations, it has so far sidestepped questions on whether it supports the new proposal by Beijing and Moscow. Japan, which has historically been a staunch supporter of sanctions against North Korea, has also refrained from commenting on the proposal. (Reporting by Ben Blanchard; Additional reporting by Hyonhee Shin in Seoul; Editing by Michael Perry)