With North Korea's leader Kim Jong-un having invited President Moon Jae-in to Pyongyang for a summit, the focus is now on how South Korea can coordinate with the United States to leverage the initiative as an opportunity for denuclearization talks.
North Korea's nominal head of state Kim Yong-nam also attended the luncheon with Mr. Moon.
Past "charm offensives" have been interpreted as North Korea trying to recoup from crippling sanctions on their nuclear program, or trying to drive a wedge between Seoul and its US ally.
Saturday's meeting, the most significant diplomatic encounter between the two sides in more than a decade, could now be surpassed should Moon accept Kim's invitation to visit Pyongyang later this year.
Lookalikes of Donald Trump and Kim Jong Un who caused a stir at Friday's Pyeongchang Olympics opening ceremony have thanked organisers for their tender loving care.
The offer could put Moon in a delicate diplomatic quandary, but he avoided a direct response, said his spokesman Kim Eui-kyeom, and called instead for efforts to "create the right conditions" for a visit.
As they shook hands, the North and South Koreans spoke briefly.
Neither approach inspired a goal from the home team, which went down 0-8, but it was clear who connected with the mainly young South Korean fans, who have grown up physically separated from the poor, one-party state to the North.
A giant dove of peace lit up the night sky, famous South Korean singers sang John Lennon's "Imagine" and, most significantly of all, athletes from North and South Korea walked in unison for the first time in 11 years.More news: Israeli minister says airstrikes despatched clear message to Iran
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After sitting at a table, Kim Yo Jong placed a blue document folder in front of her.
The South Koreans want to use the Olympics to ease tensions spurred by North Korea's pursuit of nuclear weapons.
"The vice president is grateful that President Moon reaffirmed his strong commitment to the global maximum pressure campaign and for his support for continued sanctions", Pence spokeswoman Alyssa Farah said when asked about the development.
Moon earlier attended the short track speed skating with US Vice President Mike Pence, who has not interacted with the North Koreans even though he was seated in the same box as them at Friday's opening ceremony. She is a close aide to her brother "and since his accession manages his public events, itineraries and logistical needs, among other tasks", according to North Korea Leadership Watch.
Dialogue with the U.S..
The two sides have come a long way since Seoul hosted the Summer Olympics in 1988, where North Korea refused to attend and bombed a Korean Air flight in the months before the Games in an attempt to scare the global community.
Last week, the Trump administration withdrew the nomination of its candidate to be ambassador to South Korea, Victor Cha, after he warned the White House that a pre-emptive "bloody nose" attack against Pyongyang would risk pulling the United States into a devastating war.
She smiled and shared a warm greeting with Moon Jae In, South Korea's leader, as the divided countries marched under a single flag in the contest's opening ceremony.