China and Vietnam sign agreement to cool sea dispute

Oct 12 (Reuters) - China and Vietnam signed an agreement seeking to contain a dispute over the South China Sea that has stoked tensions between the two Communist-ruled neighbours divided by a history of distrust, China's official news agency said on Wednesday.

Diplomats signed the six-point agreement on Tuesday, while the General Secretary of the Vietnamese Communist Party, Nguyen Phu Trong, held conciliatory talks with Hu Jintao, who is China's Communist Party chief and president.

Vietnam and China -- as well as the Philippines, Brunei, Malaysia and Taiwan -- stake conflicting claims of sovereignty over parts of the South China Sea, a potentially oil and gas rich body of water spanned by key shipping lanes.

Under the deal that builds on Beijing's efforts to cool tensions over rival territorial claims in the South China Sea, the two sides agreed to open a hotline to deal with potential maritime flare-ups and hold border negotiation talks twice a year.

"The two countries should remain committed to friendly consultations in order to properly handle maritime issues and make the South China Sea a sea of peace, friendship and cooperation," said the agreement, according to China's Xinhua news agency.

"Both sides should solve maritime disputes through negotiations and friendly consultations."

The bridge-building effort could dispel some of the rancour that has built up in the region, setting Beijing against Southeast Asian nations that have turned to the United States to counter growing Chinese military and political influence.

Last month, China's top official newspaper warned that a joint energy project between India and Vietnam in the sea infringed China's territorial claims.

In May and June, Vietnam accused Chinese vessels of harassing Vietnamese ships within Vietnam's exclusive economic zone. China denied its ships had done anything wrong.

Businessmen and diplomats say China has pressured foreign firms in deals with Vietnam not to develop oil blocks in the sea.

China helped Vietnamese Communist forces to victory in their decades-long fight against U.S. backed forces, but the two Asian nations have a history of mutual distrust reflecting Vietnam's anxieties about its much bigger neighbour. In 1979, they fought a short but bitter border war.

On the day that the agreement was signed, China's President Hu told Vietnam's party chief Trong their two countries should try to get along.

"Stick to using dialogue and consultations to handle properly problems in bilateral relations," said Hu, according to a Xinhua report.

(Reporting by Chris Buckley; Editing by Sugita Katyal)