Beijing/Tokyo, May 25 (Reuters): China dismissed Japan’s apologies for its wartime past yesterday but Tokyo sought to cool tempers and analysts said the two would not allow a snub to Prime Minister Junichiro Koizumi deteriorate into a major row.

Still, one foreign ministry official in Tokyo said the government would demand an explanation for China’s vice-premier Wu Yi cancelling a meeting with Koizumi on Monday and returning home early.

Japanese stocks fell for the second straight day today amid concerns that the snub and the resumption of a war of words between Asia’s two most economically powerful nations could affect bilateral trade worth about $170 billion in 2004.

“The thorny issue between China and Japan has come up again. We know it’s a diplomatic issue, but it’s not good (for the Japanese economy),” said Hiroaki Kuramochi, managing director at Bear Stearns in Tokyo, after the benchmark Nikkei index closed about 1.1 per cent down. Yesterday, the Nikkei fell 0.22 percent.

China originally said that Wu had cut short the trip because of pressing domestic business, but Chinese officials later made it clear it was a reaction to Koizumi’s refusal to give up visits to the Yasukuni war shrine, which Beijing sees as a symbol of Tokyo's past militarism. Japan has apologised for wartime atrocities during its 1931-45 occupation of parts of China.