The U.N. nuclear watchdog said it has seen releases of steam and water indicating that North Korea may be operating a reactor, in the latest update on a plant that experts say could make plutonium for atomic bombs.

North Korea announced in April of last year that it would revive its aged five-megawatt research reactor at the Yongbyon nuclear complex, saying it was seeking a deterrent capacity.

The isolated and poverty-stricken state defends its nuclear program as a "treasured sword" to counter what it sees as U.S.-led hostility.

In an annual report posted on it website, the Vienna-based International Atomic Energy Agency said North Korea's nuclear program "remains a matter of serious concern."

The U.N. agency said it continued to monitor developments at Yongbyon through satellite imagery.