I am not sure what your scenario is, but I assume that you need to use data-binding scenario. In order to achieve your requirement you can use a DispatchedTimer with an interval of one second. Furthermore, you can update the currently selected item just by index using the Panelbar.Itemscollection. Please note that this collection holds your business items. This is why you can define an IsSelected property in your business object and bind it to the RadPanelBarItem.IsSelected property using a Style.
For your convenience I implemented this approach in the attached project. Please take a look at it and let me know if it fits your needs. Please note that this is demonstration project and it has not been tested. If you want to use it in your application you might have to improve the code.