* G7 agrees need to send clear message on South, East China
seas
* Beijing opposes "hyping" South China Sea for personal gain
* Obama says North Korea "hell bent" on getting nuclear
weapons
* G7 worried about emerging economies, Abe references Lehman
shock
(Adds Abe comments on North Korea, changes byline)
By Thomas Wilson and Kiyoshi Takenaka
ISE-SHIMA, Japan, May 26 (Reuters) - Group of Seven (G7)
leaders agreed on Thursday on the need to send a strong message
on maritime claims in the western Pacific, where an increasingly
assertive China is locked in territorial disputes with Japan and
several Southeast Asian nations.
The agreement prompted a sharp rejoinder from China, which
is not in the G7 club but whose rise as a power has put it at
the heart of some discussions at the advanced nations' summit in
Ise-Shima, central Japan.
"Prime Minister (Shinzo) Abe led discussion on the current
situation in the South China Sea and East China Sea. Other G7
leaders said it is necessary for G7 to issue a clear signal,"
Japanese Deputy Chief Cabinet Secretary Hiroshige Seko told
reporters after a session on foreign policy affairs.
At a news conference late on Wednesday, Abe said Japan
welcomed China's peaceful rise while repeating Tokyo's
opposition to acts that try to change the status quo by force.
He also urged respect for the rule of law. Both principles are
expected to be mentioned in a statement after the summit.
The United States is also increasingly concerned about
China's action in the region.
Chinese Foreign Ministry spokeswoman Hua Chunying retorted
in Beijing that the South China Sea issue had "nothing to do"
with the G7 or any of its members.
"China is resolutely opposed to individual countries hyping
up the South China Sea for personal gain," she said.
U.S. President Barack Obama called on China on Wednesday to
resolve maritime disputes peacefully and he reiterated that the
United States was simply concerned about freedom of navigation
and overflight in the region.
Obama on Thursday pointed to the risks from North Korea's
nuclear and missile programmes, saying the isolated state was
"hell bent" on getting atomic weapons.
But he said there had been improved responses from countries
in the region like China that could reduce the risk of North
Korea selling weapons or nuclear material.
"It's something that we've put at the centre of discussions
and negotiations with China," Obama told reporters.
Seko, speaking the first of two days of the summit in
central Japan, said Abe told G7 counterparts that Pyongyang's
development of nuclear technology and ballistic missiles poses a
threat to international peace, including in Europe.
"It is necessary to make North Korea realise that it would
not be able have a bright future unless such issues as
abduction, nuclear and missile development are resolved," Abe
told the group, according to Seko.
The G7 groups Britain, Canada, France, Germany, Italy, Japan
and the United States.
GLOBAL HEALTH CHECK
The global economy topped the agenda earlier in the day,
when G7 leaders voiced concern about emerging economies and Abe
made a pointed comparison to the 2008 global financial crisis.
Not all his G7 partners appeared to agree.
The G7 leaders did agree on the need for flexible spending
to spur world growth but the timing and amount depended on each
country, Seko told reporters, adding that some countries saw no
need for such spending. Britain and Germany have been resisting
calls for fiscal stimulus.
"G7 leaders voiced the view that emerging economies are in a
severe situation, although there were views that the current
economic situation is not a crisis," Seko said.
Abe presented data showing global commodities prices fell 55
percent from June 2014 to January 2016, the same margin as from
July 2008 to February 2009, after the Lehman collapse.
Lehman had been Wall Street's fourth-largest investment bank
when it filed for Chapter 11 protection on Sept. 15, 2008,
making its bankruptcy by far the biggest in U.S. history. Its
failure triggered the global financial crisis.
Abe hopes, some political insiders say, to use a G7
statement on the global economy as cover for a domestic fiscal
package including the possible delay of a rise in the nation's
sales tax to 10 percent from 8 percent planned for next April.
Obama ripped into Republican presidential candidate Donald
Trump, saying the billionaire had rattled other G7 leaders and
that his statements were aimed at getting headlines, not what
was needed to keep America safe and the world on an even keel.
Trump has been accused of racism, misogyny and bigotry for
saying he would build a giant wall to keep out illegal Mexican
immigrants, would temporarily ban Muslims from the United States
and issued a series of comments considered demeaning to women.
Summit pageantry began when Abe escorted G7 leaders to the
Shinto religion's holiest site, the Ise Grand Shrine in central
Japan, dedicated to sun goddess Amaterasu Omikami, mythical
ancestress of the emperor.
On Wednesday night, Abe met Obama for talks dominated by the
arrest of a U.S. military base civilian worker in connection
with the killing of a young woman on Japan's Okinawa island,
reluctant host to the bulk of the U.S. military in Japan.
The attack dimmed Obama's hopes of keeping his Japan trip
strictly focused on his visit on Friday to Hiroshima, site of
the world's first atomic bombing, to highlight reconciliation
between the two former World War Two enemies as well as his
nuclear anti-proliferation agenda.