JERUSALEM (AFP) - Japanese Prime Minister Shinzo Abe demanded on Tuesday that the Islamic State in Iraq and Syria (ISIS) group immediately free two Japanese hostages unharmed after the Islamists posted a video threat to kill them.

"I strongly demand that they not be harmed and that they be immediately released," he said at a news conference during a visit to Jerusalem. "I am extremely indignant at such an act."

ISIS has threatened to kill the two Japanese hostages unless it receives a US$200 million (S$270 million) ransom within 72 hours, but Abe vowed not give in to "terrorism".

"The international community will not give in to terrorism and we have to make sure that we work together," Abe said as he wound up a Middle East tour and prepared to fly home.

In a video posted on jihadist websites, a militant said that the ransom demand was to compensate for US$200 million in non-military aid that Abe pledged in support of countries hit by IS violence.

But Abe whose scheduled news conference started an hour late, said that the aid would be disbursed as promised.

"This posture will not change at all," he said, stressing that the money was to help the displaced and those made homeless by the conflict in Iraq and Syria.

Abe was to make the short drive from Jerusalem to visit Palestinian president Mahmud Abbas in the West Bank city of Ramallah before cutting short his tour to fly home to Japan.