Japan and China leaders to hold bilteral talks

Reuters) - Japanese Prime Minister Naoto Kan and Chinese Premier Wen Jiabao were due to meet Friday, the Japanese Foreign Ministry said, a step expected to ease tension between Asia\'s biggest economies.



Ties between China and Japan deteriorated last month with the detention of a Chinese fishing boat captain by the Japanese coast guard after their boats collided near disputed, resource-rich islands in the East China Sea.



Speculation has swirled over whether the two leaders would hold direct talks during an Asia-Pacific summit in Hanoi, with hopes for defusing tension raised after their foreign ministers agreed to \"normalize relations\" during a meeting earlier.



Kan and Wen will meet at 1135 GMT on the sidelines of an Asia-Pacific summit in Hanoi, after their foreign ministers agreed to \"normalize relations\" during a meeting earlier.



Japanese Foreign Minister Seiji Maehara told reporters his hour-long meeting with his Chinese counterpart, Yang Jiechi, which overran its slated half-hour slot, was held in a \"very good atmosphere, in a calm and in a forward-looking manner.\"



The dispute over the boat captain, detained near the disputed islands, is the latest in a string of rows to strain ties between the neighbors.



A Japanese Foreign Ministry official said both sides repeated their claims to the uninhabited isles, called Senkaku in Japan and Diaoyu in China.



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.



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 alarmed Japan and other countries around the world.



U.S. Secretary of State Hillary Clinton, who will join the summit of 16 Asian countries Saturday, called for China to ensure the rare earth trade would continue unabated.



Clinton, in a speech on U.S. Asia-Pacific policy in Honolulu, denied that the United States was seeking to contain China as she sought to strike a balance between the U.S. desire to work with Beijing and its concerns about some Chinese policies.[nN29143213]



Japan Foreign Ministry spokesman Satoru Satoh said the rare earths curbs had \"created difficulties\" for Japan, with moves afoot to lessen its dependence on China.



NORTH KOREA, CURRENCIES



The rift between China and Japan is one of several disputes casting a shadow on efforts to boost economic cooperation in a region, increasingly seen as the world\'s engine of growth.



China also has disputes with several neighbors over boundaries in the South China Sea, an area key for international shipping and possibly rich in oil and gas.


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