By Chris Buckley and Linda Sieg
BEIJING/TOKYO (Reuters) - China claimed islands at the core of a row with Japan as its "sacred territory" in talks between the two countries' foreign ministers, Chinese state media said on Wednesday, as neither side showed any sign of backing down in a long-festering feud.
Japanese Foreign Minister Koichiro Gemba urged China to exercise restraint over the dispute during what he called a tense hour-long meeting on the sidelines of the U.N. General Assembly in New York, Japan's Kyodo news agency reported.
The spat has triggered violent anti-Japanese protests in China and hurt trade ties between Asia's two biggest economies.
China's Xinhua news agency said Chinese Foreign Minister Yang Jiechi reiterated Beijing's "solemn position on the issue of Diaoyu Islands, which have been China's sacred territory since ancient times".
Japanese Chief Cabinet Secretary Osamu Fujimura told a news conference in Tokyo the two sides had agreed to keep talking.
"There is no magic bullet in foreign diplomacy. We need to hold talks through various channels taking into account of broad perspective," Fujimura told a news conference in Tokyo.
Sino-Japanese relations deteriorated sharply this month after Japan bought the isolated East China Sea islands, called Senkaku in Japan and Diaoyu in China, from their private owner, sparking protests across China.
In a sign of the economic fallout, Japanese automakers Toyota Motor Corp, Nissan Motor Co Ltd and Suzuki are curtailing production in China in the wake of the protests that shuttered dealerships and darkened their sales prospects in the world's top car market.
China's meetings with Japanese diplomats -- both at the United Nations and a day earlier in Beijing -- suggest Beijing does not want the row over the island chain, believed to be in waters rich in natural gas deposits, to lead to a rupture in relations. This is, after all, the Year of Japan-China Friendship.
But the unyielding tone of China's published remarks suggests that the dispute is far from over. Beijing has repeatedly called the islands its "sacred territory since ancient times".
"The Japanese move is a gross violation of China's territorial integrity and sovereignty, an outright denial of the outcomes of victory of the world anti-fascist war and a grave challenge to the post-war international order," said Yang, according to the Xinhua summary of his comments.
Sino-Japanese ties have long been plagued by China's bitter memories of Tokyo's military aggression in the 1930s and 1940s as well as present rivalry over regional resources and clout.
The row coincides with a once-in-a-decade leadership change in China, while Japanese Prime Minister Yoshihiko Noda's ruling party faces a drubbing in an election expected in months, domestic dynamics that make it hard for either side to retreat.
Noda is under fire from the main opposition party, which picked former prime minister and security hawk Shinzo Abe as its new leader, and possible next premier, on Wednesday.
Abe has been most vocal of the candidates in urging Tokyo take a tougher line in its territorial disputes with China and South Korea but on Wednesday he struck a balanced tone.
"We must show our will to firmly protect our territorial waters and Senkaku amid China's movements," he told a news conference after being elected party chief.
But he added: "Even if our national interests clash, we should acknowledge that we need each other and control the situation while thinking things strategically. My stance on this has not changed."
Japan, which says the islands' purchase was meant to fend off a more provocative bid by the nationalist governor of Tokyo, Shintaro Ishihara, to have his metropolitan government buy them, is trying to keep communication channels open.
China postponed a ceremony marking the 40th anniversary of the resumption of diplomatic ties with Japan, but an official at the Japan-China Economic Association said Toyota Motor chairman Fujio Cho and Hiromasa Yonekura, chairman of Japanese business lobby Keidanren, and other representatives of Japan-China friendship groups would attend an event on Thursday in Beijing.
Patrol vessels from the two countries have also been playing a tense game of cat-and-mouse in the waters near the disputed islands, raising concerns that an unintended collision or other incident could escalate into a broader clash.
(Editing by Nick Macfie and Jeremy Laurence)