Japan's Prime Minister Yoshihiko Noda insisted Wednesday there could be no compromise with China on the ownership of a disputed island chain and denounced attacks on Japanese interests.

Speaking to reporters at the UN General Assembly in New York, Noda said China had misunderstood the issues at stake and demanded an end to attacks on Japanese citizens and business interests in China by nationalist protesters.

"So far as the Senkaku islands are concerned, they are an integral part of our territory in the light of history and of international law," Noda said, referring to an archipelago in the East China Sea that China knows as Diaoyu.

"It is very clear and there are no territorial issues as such. Therefore there cannot be any compromise that could mean any setback from this basic position. I have to make that very clear," he told reporters.

China's Foreign Minister Yang Jiechi told his Japanese counterpart Koichiro Gemba at the United Nations on Tuesday that Japan had been guilty of "severely infringing" its sovereignty, according to Beijing's foreign ministry.

"The Chinese side will by no means tolerate any unilateral action by the Japanese side on the Diaoyu Islands," Yang told Gemba, according to his office.

A Japanese official in New York confirmed to AFP that the talks had been "severe," but noted the two sides had agreed to maintain a dialogue.

The dispute erupted into an angry war of words between Beijing and Tokyo after the Japanese government took the previously privately-held islands into public ownership, but Noda insisted this move had been misinterpreted.

"Part of the Senkaku islands that was held by a private citizen was transferred to governmental possession in order to ensure the stable management of it," he said, according to an official translation.

"It is not a new acquisition. It was held under the private ownership of a Japanese citizen and was a transfer of ownership within Japanese law," he said, adding: "We have explained this to China at length."

"But it seems that China has yet to understand that and, because of that lack of understanding, there has been an attack or acts of violence and destruction against Japanese citizens and property there," he complained.

"And we have conveyed clearly that in any circumstances violence is not to be condoned, and we strongly demanded China accord protection to Japanese citizens and property there," he added.

The attacks on Japanese factories and businesses have ostensibly been carried out spontaneously by patriotic crowds, but such protests are usually tightly policed in China, leading to suspicions of official collusion.

Noda refused to be drawn on whether Japan would demand compensation from China for the damage, but the economic toll of the dispute between two of the world's biggest trading partners is mounting daily.

Shortly before the Japanese premier spoke, Japanese airline All Nippon Airways (ANA) revealed that 40,000 reservations had been canceled on its Japan-China flights for the three months to November.

And Japanese auto giants Toyota and Nissan said they would cut production in China because demand for Japanese cars has been hit by the row.

Japanese envoys in New York said they could see no reason why sovereignty over the islands should be in doubt, but Noda said Japan would be confident of victory if the case were referred to the International Court of Justice.

In a complicated three-way dispute, Taiwan also claims ownership of the chain. South Korea and Japan, meanwhile, dispute the sovereignty of another island, known in Japan as Takeshima, but administered from Seoul.

Chinese government ships have sailed into waters around the disputed islands in recent days in an apparent bid to assert sovereignty, but there was no sign of them in the area Wednesday, according to Japanese coast guards.

And on Tuesday, coast guard vessels from Japan and Taiwan dueled with water cannon after dozens of Taiwanese fishing boats escorted by patrol ships sailed into waters around the Tokyo-controlled islands for several hours.

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