U.S. and China talk up ties despite regional strains

* Clinton, Hu upbeat in early remarks

* Island disputes create friction

* China paper suggests Washington trying to "sow discord"

By Andrew Quinn

BEIJING, Sept 5 (Reuters) - China's top state newspaper warned visiting U.S. Secretary of State Hillary Clinton on Wednesday not to seek advantage from disputes in the South China Sea, with both powers emphasizing hopes for cooperation rather than tension and discord.

Beijing and Washington have both stressed hopes for steady ties, especially as they confront domestic political hurdles. But the tensions in the South China Sea have emerged as a persistent irritant, reflecting suspicions in Beijing that the Obama administration is seeking to rein in Chinese influence.

"We believe the U.S.-China relationship is on a strong and solid base," Clinton told Chinese President Hu Jintao at the start of talks, where pool reporters were given brief access.

"We are able to explore areas of agreement and disagreement in a very open manner, which I think demonstrates the maturity of the relationship and the chance to take it further in the future," she said in opening remarks echoed by President Hu.

The overseas edition of state mouthpiece the People's Daily, however, laid out Chinese concerns ahead of Clinton's meetings with Chinese leaders, and suggested the United States is seeking to gain leverage from China's tensions with Japan and Southeast Asian countries.

"The United States' recent conduct concerning the Diaoyu islands and South China Sea issues cannot but create the suspicion that it is attempting to sow discord in order to fish for advantage," said a front-page commentary in the paper, which broadly reflects official thinking.

"In the long term, this kind of adjustment in the United States' Asia-Pacific strategy will not bring gains, and could even backfire," it said.

The uninhabited Diaoyu islands -- called Senkaku in Japan -- have been a source of friction between Beijing and Tokyo, which have rival territorial claims to the islets and surrounding fishing areas and potentially rich gas deposits.

JAPAN TO BUY ISLANDS

On Wednesday, domestic media reported the Japanese government planned to buy the islets from their private Japanese owners, a move likely to fuel tensions between Asia's two largest economies.

China's claims over much of the South China Sea, including the Spratly and Paracel islands, have also put it at loggerheads with Vietnam, the Philippines and other Southeast Asian nations.

The disputes come as China's ruling Communist Party is preoccupied with a once-in-a-decade leadership over coming months, while President Barack Obama is focused on a re-election fight culminating in November's vote.

A senior U.S. official told travelling reporters that Vice President Xi Jinping, who is overwhelmingly likely to succeed Hu as president, had to cancel his meeting with Clinton.

Xi also cancelled an earlier meeting with Singapore's prime minister, suggesting that his absence was not a snub directed at Clinton.

In Jakarta on Monday, Clinton urged China and Southeast Asian nations to move quickly on a code of conduct for the South China Sea and stressed that disputes should be resolved "without coercion, without intimidation, without threats and certainly without the use of force"..

China has been irked by the U.S.-backed proposals for a multilateral approach to managing and eventually resolving the South China Sea disputes, preferring to negotiate separately with each of the far less powerful Asian claimants.

On Tuesday, Chinese Foreign Ministry spokesman Hong Lei suggested that Washington had not been a helpful force in the maritime disputes, indicating that Clinton may face some resistance in her talks with President Hu, Foreign Minister Yang Jiechi, and other senior officials.

But both sides have also stressed their hopes for fruitful talks. The Obama administration wants greater Chinese cooperation on other international problems, including reining in the North Korean and Iranian nuclear programmes, and finding a solution to the Syria crisis.

In brief public remarks after her arrival on Tuesday night, Clinton called the U.S.-China relationship crucial to the Obama administration's "pivot" to more engagement with the Asia-Pacific.