* First inter-Korean dialogue since December 2015
* N.Korea participation in Winter Olympics main agenda
* Family reunions, easing military tension may also be on table
By Christine Kim
SEOUL, Jan 9 (Reuters) - North and South Korea will hold their first formal talks for more than two years on Tuesday, brought together by sport to discuss how the North's athletes can attend next month's Winter Olympics in the South despite simmering fears of conflict.
Regardless of its narrow, primarily sporting agenda, the meeting will be closely watched by world leaders eager for any sign of a reduction in tensions on the Korean peninsula amid rising fears over North Korea's development of nuclear weapons and defiance of United Nations Security Council resolutions.
"The talks will focus on North Korea's participation in the Pyeongchang Winter Olympics and our preparations have centred around some requests made by the North for a peaceful Olympic Games," Unification Ministry spokesman Baek Tae-hyun told a media conference on Monday.
Some South Korean officials are hoping the two Koreas may even march under a single flag at a sports opening ceremony for the first time in more than a decade.
Five senior officials from each side will meet at the three-storey Peace House on the South Korean side of the Panmunjom truce village, with talks to begin at 10 a.m. (0100 GMT).
As previously, cameras and microphones will be placed in the room to ensure that officials from both sides can monitor the talks as they happen.
The United States, which has 28,500 troops stationed in South Korea as a legacy of the 1950-1953 Korean War, initially responded coolly to the idea of inter-Korean meetings.
The State Department had said Pyongyang "might be trying to drive a wedge" between Washington and Seoul.
U.S. President Donald Trump spent much of the past year deriding negotiations as useless and lobbing insults at North Korean leader Kim Jong Un.
But on Thursday, Trump called the new talks "a good thing" and said they had been prompted by his "firm, strong" stance, which has included harsher international sanctions and threats of military intervention if the North does not give up its weapons program.
On Saturday, Trump said he was "100 percent" behind the talks and hoped for positive developments. He also said he would "absolutely" be willing to talk on the phone to Kim.
"Look, right now they're talking Olympics. It's a start, it's big start," he said. "If something can happen and something come out of those talks, that would be a great thing for all of humanity, that would be a great thing for the world," he said.
Trump said he would like to see talks go beyond the Olympics and added: "At the appropriate time, we'll get involved."
South Korea's President Moon Jae-in persuaded the United States to delay joint military exercises until after the Olympics in a bid to reduce tensions and possibly create room for diplomacy.
The talks come after North Korea's Kim used his New Year's Day speech to announce he was open to sending a delegation to the Olympics as well as generally reducing tensions on the Korean peninsula, while vowing to never give up his nuclear weapons program.
The Trump administration has said that any future talks between the United States and North Korea must be aimed at denuclearization.
Baek said other issues aimed at boosting cooperation between the two Koreas will be discussed.
Unification Minister Cho Myong-gyon has said his delegation has been preparing to discuss resuming reunions of family members separated by the Korean War. That conflict ended in a ceasefire and technically the two sides remain at war.
North Korea's delegation will be led by Ri Son Gwon, chairman of the North's Committee for the Peaceful Reunification of the Fatherland. Committee vice chairman Jon Song Su and Hwang Chung Song, a director, will join Ri.
Ri, the committee chairman who was promoted to his current position in June 2016, is a seasoned negotiator for inter-Korean talks although his previous experience has mostly been military-related due to his career in the armed forces. (Additional reporting by Josh Smith in SEOUL and David Brunnstrom, Jim Oliphant and Steve Holland in WASHINGTON; Editing by Simon Cameron-Moore)