HANOI (Reuters) - Japan and China have agreed to improve ties, Japan's foreign minister said on Friday after talks with his Chinese counterpart likely to set the stage for fence-mending between the leaders of Asia's biggest economies.
Japanese Foreign Minister Seiji Maehara told reporters after meeting China's Foreign Minister Yang Jiechi that the leaders of both nations, whose ties have been strained by a dispute over islands in the East China Sea, were likely to hold one-on-one talks on the sidelines of an Asian summit in Hanoi.
"I think that Japan-China leaders' summit will probably take place," Maehara said, adding his talks with Yang, which lasted for about an hour, were held in a "very good atmosphere, in a calm and in a forward-looking manner."
Speculation has swirled over whether Japanese Prime Minister Naoto Kan and Chinese Premier Wen Jiabao, would hold direct talks during the Asia-Pacific summit.
Historically testy relations between their countries deteriorated last month when a dispute flared over oil and resource-rich islands in the East China Sea that both countries claim as sovereign territory.
Maehara also said he had expressed Japan's concern about China's policy on rare earths, and that Yang assured him China would not use the minerals as bargaining tools.
For factbox on China-Japan ties: [ID:nTOE68J014]
For factbox on frictions with China: [ID:nSGE68N028]
Map of the disputed islands: http://link.reuters.com/dyv92p
Graphic on the two economies: http://link.reuters.com/tup64p
Full coverage of rare earths [ID:nSGE69P0D3]
Chinese restrictions on the export of rare earth minerals, vital for the manufacture of high-tech goods, and over which China has a near-monopoly on global production, have also alarmed Japan and others.
"I have expressed concerns about China's response on rare earths," Maehara said.
"China said that it will not use this as a bargaining tool and that it is based on the Chinese view of protecting the environment and managing resources."
The New York Times reported in September, citing unidentified sources, that China had imposed an embargo on rare earths shipments to Japan, in retaliation for Japan's arrest of a Chinese ship captain after a collision in disputed waters.
On Friday, the Times reported that embargo was lifted, again citing unidentified sources.
Chinese officials have repeatedly denied any unilateral embargo, and trading sources had not independently confirmed that there was one.
U.S. Secretary of State Hillary Clinton, who will join the summit of 16 Asian countries on Saturday, called for China to ensure the rare earth trade would continue unabated.
Kyodo also reported that Maehara asked Yang to resume negotiations on a deal over an East China Sea gas field development.
"I asked a detailed explanation on the current situation of Shirakaba (gas field) including experts," Maehara told reporters.
The rift between China and Japan is one of several disputes casting a shadow on efforts to boost economic cooperation among countries in a region increasingly seen as the world's engine of growth.
(Writing by John Ruwitch; Editing by Robert Birsel and Miral Fahmy)
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