Japan firms stop China operations after protests

BEIJING (AFP) - Japanese firms including Panasonic suspended operations at plants in China, companies and reports said on Monday, after mass anti-Tokyo protests at the weekend over disputed islands in the East China Sea.

Speaking in Tokyo, United States Defence Secretary Leon Panetta called for diplomatic efforts to resolve the worsening spat, a day after warning "misjudgment on one side or the other could result in violence, and could result in conflict".

China is Japan's biggest trading partner and the stoppages came as the ruling Communist Party's mouthpiece warned Japan's economy could suffer for up to 20 years if Beijing chose to impose sanctions over the territorial row.

Trade sanctions between Asia's two biggest economies could cast a pall over growth on the continent, which major Western countries are counting on to drive recovery from the global slowdown.