TOKYO (REUTERS) - Japanese Prime Minister Shinzo Abe is unlikely to meet South Korean President Moon Jae-in during the United Nations general assembly in September, the Sankei newspaper reported, the latest sign of worsening relations between the key US allies.

Mr Abe will not hold talks with Mr Moon unless Seoul takes constructive steps on the issue of World War II labourers and other issues, the Japanese daily said on Monday (July 29).

Mr Abe will also forgo meeting Mr Moon during other opportunities, including an Asean meeting in October and an Asia-Pacific Economic Cooperation (Apec) gathering in November, for the same reason, the Sankei said.

Relations between Japan and South Korea are arguably at their lowest since the countries normalised ties in 1965 as they spar over compensation for wartime forced labourers and recent export curbs imposed by Tokyo.

Japan has tightened restrictions on exports of some high-tech materials to South Korea, citing what it has called inadequate management of sensitive items by its Asian neighbour.

The curbs were seen as a response to South Korean court rulings ordering Japanese companies to compensate wartime forced labourers.

Japan says the decision violated international law because the issue of compensation was settled under the 1965 treaty that established diplomatic relations between the two nations after World War II.

"Things might be at their worst since the normalisation of diplomatic relations," the Sankei quoted an unidentified source close to Mr Abe as saying.

Mr Abe and Mr Moon also did not meet on the sidelines of the Group of 20 (G-20) leaders' summit in Osaka in June.

Adding to the export curbs, Japan is preparing for Cabinet approval as early as Friday to remove South Korea from a so-called white list status with minimum trade restrictions, Japanese media reported.

South Korea has protested against the plan, saying it would undermine their decades-old economic and security cooperation and threaten free trade.