(Recasts with Russian solution at hand, changes dateline)

By Oleg Shchedrov

MOSCOW, June 13 (Reuters) - Russia said on Wednesday it was preparing an operation to transfer North Korean funds frozen at a Macau bank, raising the chances for an end to the deadlock that has stalled a nuclear disarmament deal for weeks.

"The appropriate operation is being prepared," a Russian finance ministry source told the Itar-Tass news agency.

"There are several technical problems to solve related to ensuring Russia's legal interests. There are also issues related to a Russian bank's role in international fund transfer."

Pyongyang has refused to honour a February deal to begin shutting its Yongbyon nuclear reactor and source of material for atomic bombs until the $25 million of its funds stuck in Banco Delta Asia (BDA) in Macau is released through normal banking channels.

That would in effect allow the reclusive communist state back into the international banking system from which it is currently ostracised.

The funds were blocked after the United States blacklisted BDA, accusing it of laundering illicit funds for North Korea.

Because of the stigma attached to holding North Korean assets, banks have balked at acting as a conduit for the money to be returned to Pyongyang.

MOUNTING OPTIMISM

South Korea's foreign minister said earlier on Wednesday that negotiations to transfer the North Korean funds were in their final stages, and Yonhap news agency quoted an official in Seoul as saying the deal could be completed by the end of the week.

Optimism the impasse could be resolved grew this week after U.S. officials said Moscow would help out, and confirmation came from the Russian ministry on Wednesday.

"The Russian side... does not mind a possible participation of the Russian banks in arranging a transfer of North Korean funds held on accounts in Delta Asia bank to North Korea," ministry spokesman Mikhail Kamynin said in a statement.

"As of now, examination of all legal aspects related to their participation in this financial operation is under way which is aimed at preventing Russian banks from falling under U.S. sanctions, among other things," it added.

The Wall Street Journal reported on Monday that Far East Commercial Bank, a private Russian bank where Pyongyang has a dormant account, was likely to receive the funds.

Russia is one of five regional powers -- along with China, Japan, South Korea and the United States -- which has been negotiating with impoverished North Korea to end its nuclear weapons programme in exchange for massive economic aid.

Under the February agreement, North Korea is slated to get 50,000 tonnes of heavy fuel oil, or its equivalent, once it completes initial steps, including shutting down Yongbyon.

During the next phase of the pact, which includes making a complete declaration of all its nuclear programmes and disabling all its nuclear facilities, North Korea will get economic, energy and humanitarian aid up to the equivalent of a further 950,000 tonnes of heavy fuel oil. (Additional reporting by Jack Kim and Jessica Kim in Seoul)

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