SEOUL, South Korea (AP) - The leaders of South Korea and Japan agreed Wednesday to expand the size of a currency swap deal and push to resume stalled free trade negotiations, as Tokyo returned looted Korean royal documents in a goodwill gesture.
Seoul and Tokyo have close economic ties and are key U.S. allies in Asia, but many older Koreans still harbor deep resentment against Japan over its 35-year colonial occupation of Korea that ended in 1945. Ties suffered this year because of a territorial dispute and differences over the occupation.
On Wednesday, the leaders of the two countries agreed in a meeting in Seoul that they would expand the size of their total currency swap arrangements to $70 billion from the current $13 billion as a backstop against global economic turmoil. The measures consists of dollar-local currency and bilateral won-yen arrangements.
Swaps allow one central bank to borrow a currency from another, offering an equivalent amount of its own as collateral.
"We reached the agreement ... based on a belief that we should strengthen our financial and currency cooperation to preemptively stabilize the financial market as the world's economic uncertainty is deepening," South Korean President Lee Myung-bak said at a news conference with Japanese Prime Minister Yoshihiko Noda.
Lee and Noda said they also agreed to bolster efforts to resume stalled negotiations on signing a free trade agreement.
The two countries began free trade talks in 2003, but the negotiations remain stalled over trade barriers on agriculture and fish. The South Korea-Japan deal drew renewed attention after the U.S. Congress ratified a free trade accord with South Korea this month. That deal still needs approval from South Korea's parliament.
In an effort to improve ties, Noda repatriated five volumes of Korean royal documents that his country took away during its rule.
"The return should be seen as a gift with a political intention," Seoul National University international relations professor Park Cheol-hee said.
The documents are part of 1,205 historical volumes that Japan agreed to give back to South Korea when Noda's predecessor, Naoto Kan, met with Lee last year. A Japanese official traveling with Noda told reporters in Seoul that Tokyo is to return the remaining books by Dec.10. The official declined to be named because of office policy.
Noda told Lee that he would seek to return the remanning books at an appropriate time, according to South Korea's presidential office.
The books' return came two months after South Korea banned three conservative Japanese lawmakers from entering the country after they arrived at a Seoul airport with a plan to travel near islets at the center of territorial and historical disputes between the countries.
The two countries are also at odds over Seoul's offer to hold talks on Japan's compensation of Korean women forced into sexual slavery for Japan during its colonial rule. Japan declined, saying the matter was settled by a 1965 treaty that normalized ties between Japan and South Korea.
"I stated several times that moving toward the future without forgetting history is the basis of South Korea-Japan relations," Lee said.
Noda told reporters the issue of sex slaves wasn't discussed during Wednesday's meeting.
Associated Press writers Sam Kim and Foster Klug contributed to this story from Seoul.