The leaders of China and Japan agreed on Wednesday to step up talks to reach an early deal on the disputes over gas fields in the East China Sea.

"Prospects for settling the disputes are already in view," President Hu Jintao told a press conference after a summit meeting with Japanese Prime Minister Yasuo Fukuda.

"We have decided to continue consultations to reach an agreement as soon as possible," Hu said.

Fukuda said the two sides are beginning to see the larger picture in solving the issue.

Hu, the first Chinese president to visit Japan since 1998, said bilateral ties are at a new starting point after several years in the cold.

As a gesture of goodwill, he said China would lend Japan a pair of giant pandas.

"China and Japan have no other way but to take the path of peace, friendship and cooperation," Hu said.

Fukuda echoed Hu's remarks, saying it is important for the leaders of the two countries to reach consensus on the development of bilateral ties.

During the morning summit, Hu and Fukuda agreed to establish a mechanism for regular visits by the leaders, promote cooperation in trade and environmental protection, enhance youth exchanges and strengthen defense communication.

Fukuda said Japan wishes every success for the Beijing Olympics. Its hosting of the Games is reminiscent of the Tokyo event in 1964, at which time, construction in the capital marked Japan's emergence on the world stage, he said.

Fukuda has yet to announce his decision, however, on whether he will attend the Games' opening ceremony.

Hu also said China places great importance on food safety and people's health, saying the two countries will continue to jointly investigate the contaminated Chinese dumplings.

Also on Wednesday, Hu addressed Japanese businessmen at a lunch.

"China's rapid economic growth will create a larger space for bilateral economic cooperation," he said, adding there is great potential for trade partnerships.