(Adds South Korea's foreign minister)

PANMUNJOM, South Korea, Sept 19 (Reuters) - A North Korean official on Friday dismissed as malicious gossip reports from last week that leader Kim Jong-il may have suffered a stroke and warned that the secretive state could restart its nuclear plant.

U.S. and South Korean officials said Kim, 66, may have fallen seriously ill, which raised questions about succession in Asia's only communist dynasty and who controls its nuclear arsenal.

"It is sophism by bad people who wish ill for our country," North Korean Foreign Ministry official Hyon Hak-bong said as he wagged his finger at reporters ahead of talks with South Koreans at a border truce village, according to a pool report.

Kim's suspected illness came as impoverished North Korea was moving away from a disarmament deal it struck with five regional powers to take apart its nuclear weapons programme in exchange for massive aid and an end to its international ostracism.

Hyon said his country was ready to restore its Soviet-era nuclear plant that makes arms-grade plutonium. Last month, North Korea said it planned to restart the plant because it was angry at Washington for not taking it off a terrorism blacklist.

North Korea began to disable its Yongbyon nuclear plant last November as called for in the deal it struck with China, the United States, Japan, Russia and South Korea.

Washington has said it will remove Pyongyang from the list once the state allows inspectors to verify claims it made about its nuclear arms production. Once removed, the North can better tap into international finance and expand its meagre trade.

"The verification matter is a totally different matter from issues of U.S. political concessions," Hyon said, referring to removal from the terrorism list.

South Korean Foreign Minister Yu Myung-hwan told reporters it was unclear whether the North was actually about to take the steps to restore its atomic-arms plant or if it was merely posturing for better negotiating leverage.

North Korea in early September made minor but initial moves to restart Yongbyon, U.S. officials said.

The disablement steps -- mostly completed -- were aimed at putting Yongbyon out of the plutonium production business for at least a year.

North and South Korean officials were meeting at the joint Panmunjom peace village that straddles the heavily armed border to discuss energy aid provisions that were a part of the nuclear deal. (Writing by Jack Kim and Jon Herskovitz; Editing by Jerry Norton)

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