SEOUL, Aug 15 (Reuters) - South Korean President Roh Moo-hyun said on Wednesday he hopes this month's summit with communist North Korea, only the second in over 50 years, will help the Cold War foes develop common economic interests.

Roh played down any expectations of a major breakthrough in relations when he goes to Pyongyang on Aug. 28-30, but said he would press North Korean leader Kim Jong-il to abide by an agreement with regional powers to abandon nuclear weapons.

"We must begin a dialogue for the construction of a South-North economic community," Roh said in a nationally televised speech marking independence from Japanese colonial rule 62 years ago, the aftermath of which saw the division of the Korean peninsula.

"South-North economic cooperation must be developed into cooperation of productive investment and two-way cooperation that provides an opportunity for investment for the South and a chance for economic recovery for the North."

Analysts expect Roh's government to offer a massive economic package to repair the North's broken economy, further hit this month by widespread flooding.

Two-way trade is worth barely more than $1 billion a year, much of it tied to an industrial park using cheap local labour and a tourist resort the South operates just inside North Korea, and large amounts of aid from the South.

Roh said he did not expect to break major new ground in the talks, saying he was not looking to mark "any new historic turning point".

"What's important is not making some new declaration but rather keeping the promises that have been made," he said. "I'm not going to get unreasonably ambitious at the meeting."

The first summit between the two Koreas, in 2000, brought in a new era of commercial ties and eased military tension on the peninsula, which is home to some two million troops and enough artillery to wipe out each other's major cities in hours.

Expanding economic ties and funding the North's infrastructure could cost the South as much as $60 billion over the next decade, a study by the state-run Korea Development Bank said.

Some argue that is a much cheaper alternative to allowing North Korea simply to collapse, leaving South Korea with a far larger and potentially ruinous cost of clearing up the mess and coping with the flood of North Koreans who would inevitably flee across the border.

AlertNet news is provided by