Leaders of Japan and China on Saturday locked horns over disputed territory in the East China Sea, in a sign of lingering tensions despite efforts to repair ties.

The long-standing territorial spat cast a shadow over a meeting between Japanese Prime Minister Taro Aso and Chinese Premier Wen Jiabao before they were joined by South Korean President Lee Myung-Bak for a rare three-way summit.

Aso told Wen that it was "extremely regrettable" that two Chinese ships recently intruded into waters that Japan considers its own, according to a Japanese official.

Japan said the ships were spotted six kilometres (four miles) southeast of the uninhabited Senkaku, or Diaoyu, islands in the East China Sea, claimed by Japan, China and Taiwan.

"It does not have a positive effect on Japan-China relations as the incident happened when the two nations... are striving to build strategic, mutually beneficial ties," Aso said, as quoted by the official.

Wen maintained the Chinese stance that the islands were "Chinese territory since ancient times."

But he added "China wants to solve the issue appropriately through dialogue so as not to affect the recent good bilateral relations," the official said.

The two leaders were united on the economic front, with Wen agreeing to Aso's remark that it was important for the three countries to break out of the global economic crisis, the official said.

It was the sixth summit this year between Japan and China, which have been mending ties since 2006 as their economies become increasingly interlinked.

China and South Korea refused high-level contact with Japan during the 2001-2006 premiership of Junichiro Koizumi, who annually visited a shrine to Japanese war dead including war criminals from Tokyo's invasions of Asia.