* East China Sea remains source of tension
* Foreign ministers from Asia's top two economies meet in Beijing
* Japan minister wants legally binding agreement to defuse dispute (Adds details from Japan)
BEIJING, July 4 China said on Monday it had complained to Tokyo about Japanese fishing boats near disputed islands in the East China Sea, while Japan urged talks on the row and voiced concern about its neighbour's maritime activities.
The latest flare-up in the sea row happened while Japanese Foreign Minister Takeaki Matsumoto visited Beijing for talks about the intense but often icy ties between Asia's top two economies. (For more on ties, click )
It was a reminder that, despite gestures of goodwill between Beijing and Tokyo, the East China Sea remains a source of persistent tension over territorial claims and access to potentially lucrative energy reserves.
"China has lodged solemn representations with the Japanese side, and demands Japan immediately withdraws fishing boats from the relevant seas," Chinese Foreign Ministry spokesman Hong Lei said in a statement on the ministry's website (www.mfa.gov.cn).
"Any actions taken by Japan in the seas around the Diaoyu Islands are illegal and invalid," he added.
China and Japan have bickered for years over the group of uninhabited islets, known as Senkaku in Japan. They are also claimed by Taiwan.
"The Diaoyu Islands and attached islets have been Chinese territory since ancient times, and China has incontrovertible sovereignty over them," Hong said, adding that he understood that the fishing boats had left the area.
In September 2010, Japan held a Chinese trawler captain after his boat collided with Japanese coast guard ships near the isles. Beijing cancelled diplomatic meetings in protest at Japan's detention of the captain until he was released.
The two countries are also at odds over China's exploration for natural gas in the same seas. In 2008, they agreed to resolve the feud by jointly developing gas fields, but progress in the talks has been halting. Japan has accused China of drilling for gas in violation of the deal.
China has also been embroiled in tensions with Vietnam and the Philippines over disputed parts of the South China Sea.
LEGALLY BINDING AGREEMENT
In talks with Chinese Foreign Minister Yang Jiechi, Matsumoto said the two sides should seek to make progress towards a legally binding agreement to defuse the dispute, a Japanese Foreign Ministry deputy press secretary, Hidenobu Sobashima, told reporters in Beijing.
"I expressed a strong interest in recent activities by China in the oceans," Sobashima, speaking in English, paraphrased Matsumoto as saying earlier to Japanese reporters.
"I said that the two countries should promote cooperation in terms of negotiations of (a) legally binding instrument for resources exploration in the East China Sea."
Sobashima did not specify which of China's sea activities concern Japan. But Tokyo has repeatedly voiced concern about China's growing naval reach.
Nine fishing boats -- one owned by a senior official of a Japanese nationalist group led by former air force chief Toshio Tamogami and eight owned by fishermen from Japan's southern Okinawa island - went fishing around the islands on Sunday.
"We did it to show that is a Japanese territory and a Japanese fishing ground," one member of the nationalist group said. A total of about 20 people were on board, and all the ships have returned to Okinawa, he added.
Sobashima said the latest boat dispute in the sea did not come up specifically during the ministers' talks. Despite the flare-up, he expressed some confidence that negotiations over the East China Sea dispute could resume soon.
"The atmosphere is more promising," he said, noting the rise in mutual goodwill after Japan's calamitous earthquake and tsunami in March. "We are hoping for some progress."
Last week, China lambasted Japan after a confrontation between a Taiwanese fishing boat and a Japanese coast guard vessel near the islands.
China considers self-ruled and democratic Taiwan part of its territory, and has in the past weighed in over disputes between Taiwanese and Japanese ships around the islands.
Activists from China, Taiwan, Hong Kong and Japan periodically try to visit the seas around the islands, or even the islands themselves, to promote rival sovereignty claims. (Reporting by Ben Blanchard and Chris Buckley; Additional reporting by Kiyoshi Takenaka in Tokyo; Editing by Yoko Nishikawa)