WRAPUP 4-Clinton urges calm after China-Japan row at summit

* China and Japan PMs hold informal talks at summit

* U.S. offers to host tension-cooling talks with China,
Japan

* Chinese give assurance on rare earths
(Updates with comment from Clinton, Kan)

By Yoko Kubota and Arshad Mohammed

HANOI, Oct 30 (BestGrowthStock) – The premiers of China and Japan
met at an Asian regional summit in a bid to defuse a
territorial dispute on Saturday, while the United States urged
Asia’s two big economies to cool the standoff and proposed
three-way talks.

Expectations of a bilateral talk between Chinese Premier
Wen Jiabao and Japanese Prime Minister Naoto Kan were dashed on
Friday when China cancelled it, blaming Japan for “damaging the
atmosphere” at the Asia-Pacific summit in Hanoi by raising the
issue of the disputed Diaoyu islands, called Senkaku in
Japanese.

A Japanese official, however, said the two leaders
subsequently held an “informal” 10-minute meeting on the summit
sidelines on Saturday in a seemingly positive step.

“I am confident that we can maintain a relationship in
which we can cooperate in a meaningful manner,” Kan told a news
conference.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 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:nSGE69S09C]

Full coverage of Hanoi summits [ID:nSGE69Q0K5]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

U.S. Secretary of State Hillary Clinton, who met her
Chinese counterpart, Yang Jiechi, in Hanoi, urged calm on both
sides, and offered to host trilateral talks to bring relations
back on an even keel.

“We have certainly encouraged both Japan and China to seek
peaceful resolution of any disagreements,” Clinton told a news
conference. “It is in all of our interest for China and Japan
to have stable, peaceful relations.”

China and Japan have long-locked horns over sovereignty
claims in the oil-and-gas rich East China Sea but such disputes
have rarely damaged commercial ties between the economic
giants.

Clinton, in Vietnam for the first U.S. participation in an
East Asia Summit (EAS), also got assurances from China over its
policy on exporting rare earth minerals that it wished to be a
“reliable supplier”.

“Minister Yang clarified China has no intention of
withholding these minerals from the market,” she said.

She said the United States, Japan, Europe and other allies
would search for more sources of supply of he mineral, vital in
the manufacture of various high-tech products.

“So, although we are pleased by the clarification we have
received from the Chinese government, we still think that the
world as a whole needs to find alternatives.”

CURRENCIES, MYANMAR

With a G20 leader’s summit coming up in November in which
currency tension is likely to loom large, some ASEAN countries
addressed the sinking value of the U.S. dollar, which has led
to a sharp appreciation in the value of most of the region’s
currencies and eroded the competitiveness of its exports.

“The United States is looking for ways to resolve internal
economic problems but the way they are doing it is affecting
currencies in our region,” said top Thai trade official Kiat
Sitheearmorn. Export-reliant Thailand’s currency, the baht, has
appreciated about 11 percent over the past year.

The China-Japan row deflected attention from regional
issues like upcoming polls in military-ruled Myanmar, though
leaders such as Australian Prime Minister Julia Gillard
demanded the vote be free and called for the release of
political prisoners.

Critics say the Nov. 7 election will be a sham as long as
more than 2,000 political prisoners, including pro-democracy
leader Aung San Suu Kyi, remain in detention. Suu Kyi’s party
won Myanmar’s last polls in 1990 but the military ignored the
result.

The United States has stepped up Asian diplomacy under the
Obama administration and is worried about being excluded from
groupings such as the EAS as China expands its diplomatic and
economic presence.

But the summit this year, the fifth since the group’s
founding in 2005, has been overshadowed by the row between
China and Japan.

The dispute caused unease among some members of the
Association of South East Asian Nations (ASEAN) taking part in
a summit that preceded the broader regional gathering.

“You can feel the tension between China and Japan,” said a
southest Asian diplomat. “No one wants to take sides.”

Four ASEAN members — Brunei, Malaysia, the Philippines and
Vietnam — have long-running disagreements with Beijing over
parts of the South China Sea.

Sovereignty disputes over the South China Sea have emerged
in recent months as a point of convergence as Hanoi, Washington
and others seek to counterbalance China’s growing military
might and increasingly assertive behaviour.

In July, China reacted with vitriol when nearly half of the
participants at a regional security meeting of foreign
ministers under the ASEAN banner, including Clinton, raised
concerns about maritime security and the South China Sea.
(Additional reporting by Ambika Ahuja, John Ruwitch; Writing
by James Pomfret; Editing by Robert Birsel)

WRAPUP 4-Clinton urges calm after China-Japan row at summit