WASHINGTON (Reuters) - President Bush on Wednesday issued pointed challenges to overseas adversaries and friends alike but treated North Korea more gently as he laid out a second-term agenda that stressed domestic issues over foreign policy.

Bush, who three years ago said Iran and North Korea were part of an "axis of evil," now emphasizes diplomacy in dealing with both countries.

But while he called Iran the "world´s primary state sponsor of terror" he omitted such inflammatory attacks on North Korea, which had been watching his State of the Union address to see if Bush could put aside what Pyongyang has called U.S. "hostility."

Bush and top aides have made a major push in recent weeks to encourage North Korea to return to long-stalled six-country talks aimed at persuading it to abandon a nuclear arms program that may have produced eight or more weapons.

"We are working closely with governments in Asia to convince North Korea to abandon its nuclear ambitions," Bush said in his only direct reference to the reclusive communist state in his 40-minute speech.

On Iran, the president repeated his charge that the country is developing nuclear weapons. Tehran claims it is only pursuing nuclear energy for peaceful purposes.

He also promised to "stand with" the Iranian people in their quest for liberty, a veiled jab at the republic´s ruling clerics.

U.S. officials are hoping recent elections in Afghanistan, Iraq and the Palestinian territories will inspire favorable developments in Iran. The country holds new elections later this year.

MULTILATERAL EFFORTS

Despite his tough rhetoric, Bush, in his annual address to the U.S. Congress, talked of multilateral efforts to settle differences with Iran.

"We are working with European allies to make clear to the Iranian regime that it must give up its uranium enrichment program and any plutonium reprocessing, and end its support for terror," Bush said.

Last month, Vice President Dick Cheney said Iran was at the top of the Bush administration´s list of world trouble spots and said Israel might "act first" to eliminate any nuclear threat from Tehran.

Bush also had tough words for Syria for allowing "its territory and parts of Lebanon to be used by terrorists who seek to destroy every chance of peace in the region."

He hailed Congress´ passage of the Syrian Accountability Act, which enabled Bush to impose certain sanctions on Damascus, and warned that "we expect the Syrian government to end all support for terror and open the door to freedom."

Analyst Fareed Zakaria said on ABC Television that Bush outlined a much more ambitious domestic agenda for his second term than a foreign policy agenda.

Bush did some "saber rattling" with Iran and Syria "but we´re not going to do anything" militarily in either case, Zakaria predicted.

In addition to long-time U.S. adversaries, Bush has strong words for U.S. Middle East allies, urging them to aim for a "higher standard of freedom.

Saying "hopeful" reform is taking hold from Morocco to Jordan to Bahrain, he urged Saudi Arabia to "demonstrate its leadership in the region by expanding the role of its people in determining their future."

"And the great and proud nation of Egypt, which showed the way toward peace in the Middle East, can now show the way toward democracy in the Middle East," he said.

Bush put details on the soaring democracy-promotion vision he discussed in his inaugural speech on Jan. 20, but he also sought to curb expectations about what it means.

He promised the United States would not impose its specific system on other countries and suggested he sees democracy in many countries as an "ultimate" goal not necessarily an immediate one.

Iran and North Korea were included in the "axis of evil" by Bush along with Iraq in his State of the Union address of 2002, only months after the Sept. 11, 2001, attacks on New York and Washington. The United States invaded Iraq a year later and has been trying to put down an insurgency there ever since. (© Reuters 2005 02/03/05)