* Japan finalises $26 mln buy of disputed islands
* China, Taiwan issue protests, warnings
* Japan at pains to assure China deal not meant as provocation
* Dispute flare-up already seen affecting business.
By Kiyoshi Takenaka
TOKYO, Sept 11 (Reuters) - Japan brushed off warnings by China and bought a group of islands on Tuesday that both claim, in a growing dispute that threatens ties between Asia’s two biggest economies.
Chinese official media said Beijing had sent two patrol ships to waters surrounding the islands to reassert its claim and accused Japan of “playing with fire” over the long-simmering row.
Tokyo insisted that it had only peaceful intentions in making the 2.05 billion yen ($26.18 million) purchase of three uninhabited islands in the East China Sea, until now leased by the government from a Japanese family that has owned them since early 1970s.
Foreign Minister Koichiro Gemba repeated Japan’s standard line that the purchase served “peaceful and stable maintenance of the islands.”
“We cannot damage the stable development of the Japan-China relationship because of that issue. Both nations need to act calmly and from a broad perspective,” he told reporters after a cabinet meeting approved the transaction.
The Japanese Coast Guard will administer the islands, called Senkaku in Japan and Diaoyu in China, which are near rich fishing grounds and potentially huge maritime gas fields.
The long-running territorial dispute flared again last month after Japan detained a group of Chinese activists who had landed on the islands.
But the row appears to be having an economic impact, with a Chinese official saying Japanese car sales in the world’s biggest auto market may have been hit.
Chinese President Hu Jintao’s warned at the weekend against the purchase, which he called “illegal”. On Tuesday Taiwan, which also claims the territory recalled its representative to Japan in protest against the deal.
The news triggered small-scale protests in front of the tightly-guarded Japanese embassy in Beijing. Microbloggers on China’s popular Twitter-like service Sina Weibo also reported small anti-Japanese protests in the eastern city of Weihai and the southwestern city of Chongqing.
Japanese Prime Minister Yoshihiko Noda, in an address to senior military officers, made no direct reference to the islands dispute, but pointed to China’s growing military clout as one of challenges Japan had to contend with.
“We have North Korea launching missiles under the name of satellites and conducting a nuclear programme, China expanding its military might and continuing vigorous activities in regional waters and Russia also boosting its activities in the Far East,” Noda said.
The foreign ministry said it is sending its Asia department chief to Beijing on Tuesday for talks to “avoid misunderstanding and lack of explanation on the issue.”
The government bought three out of five islets that it has been leasing from the Kurihara family, which itself bought the islands in 1972 from another Japanese family that had controlled them since the 1890s. The government has owned one of the remaining islets and continues to lease one from the Kurihara family.
Noda floated the plan to buy the islets in July to head off what appeared to be a much more provocative bid by Tokyo governor Shintaro Ishihara, a harsh critic of China, to purchase them and make the islands available for development.
But Beijing, at least in public, has repeatedly warned against the government purchase.
On Tuesday, People’s Liberation Army Daily said in a commentary that Japan was playing with fire. Xinhua news agency reported two patrol vessels were heading into waters surrounding the islands.
The Japanese Coast Guard could not confirm the report.
Relations between the Asian powers, plagued by Japan’s wartime occupation of parts of China and present rivalry over regional clout, have been difficult for years. But economic ties are stronger than ever and both countries are believed to want to keep the feud from spiralling out of control.