Japan will never budge on its "sacred" ownership claim to islands in the East China Sea also claimed by China, Prime Minister Yoshihiko Noda said, doing little to ease tensions with Asia's top economic power.

While Japan isn't seeking a military confrontation with China and wants to keep talking "calmly," the disputed islands "are an inherent part of our territory in light of history and also under international law," Noda told reporters in New York today in comments translated into English by an interpreter.

Tensions over the islands, known as Diaoyu in Chinese and Senkaku in Japanese, have spilled over onto the sidelines of an annual gathering of world leaders at the United Nations. The foreign ministers of China and Japan yesterday held talks at a hotel in New York that revealed no room for compromise.

Noda's words came amid the worst diplomatic crisis between the two nations since 2005. A first round of talks yesterday did not go well. China "will not tolerate" Japan's claims to islands in the East China Sea, the Chinese Foreign Ministry said after its minister, Yang Jiechi, met with his Japanese counterpart Koichiro Gemba.

Japan's Gemba described the atmosphere at the meeting as "severe" and emphasized Japan's "maximum restraint" over the dispute, Kyodo News reported yesterday.

"There was agreement to maintain lines of communication through working-level talks," Japanese Chief Cabinet Secretary Osamu Fujimura told reporters today in Tokyo, adding that the meeting lasted about an hour. "There are no magic tricks in diplomacy. It all comes down to holding talks through various channels and at various levels."