UPDATE 2-Japan warns China activist boat near disputed isles

(Updates with latest Japan Coast Guard comment in 4th paragraph)

By Teruaki Ueno

TOKYO Oct 28 (Reuters) - A boat carrying Chinese activists on Sunday briefly entered waters claimed by Japan near disputed islands in the East China Sea, but left after a warning from a Japan Coast Guard patrol boat, the Japan Coast Guard said.

The eight uninhabited islands, known as the Senkaku isles in Japan and the Diaoyu islands in China and thought to lie near oil and gas reserves, have long been a source of friction between Tokyo and Beijing.

The Japan Coast Guard said in a statement that the boat, hoisting a Chinese flag, entered Japanese waters at about 6:22 p.m. (0922 GMT) and then approached within about 20 km (12 miles) of the main island of the chain after a warning from the Japanese patrol boat. It then sailed out of Japanese waters at around 7:35 p.m. (1035 GMT).

The Japanese patrol boat continued to warn the vessel not to re-enter the waters claimed by Japan, and it later headed off in the direction of China, a Japan Coast Guard spokesman said.

Kyodo news agency, quoting a Hong Kong-based activist group, said the vessel was carrying four Chinese protesting at Japan's control over island chain, which is also claimed by Taiwan.

The dispute over the islands flares periodically.

In February of this year, China expressed "extreme dissatisfaction" and summoned a Japanese diplomat over Tokyo's complaints about a Chinese research ship that had neared the disputed island chain.

In 2004, Japan arrested and deported seven Chinese activists who had landed on one of the islands. In 1996, David Chan, a Chinese activist, died after jumping into rough seas from a chartered Hong Kong protest ship.

Relations between Japan and China, long plagued by disputes over the wartime past as well as territorial feuds and mutual mistrust over military ambitions, deteriorated sharply when Junichiro Koizumi was Japanese prime minister from 2001-2006, partly because of his visits to a controversial war shrine.

Relations improved after Koizumi's successor, Shinzo Abe, took office and made an ice-thawing visit to Beijing in October 2006. Abe resigned last month. Incumbent Prime Minister Yasuo Fukuda favours warmer ties with China and other Asian neighbours. (Additional reporting by Linda Sieg)