China's state media warned people to avoid violence and a Chinese city outlawed "illegal" protests in some areas as anger over a territorial dispute prompted attacks on Japanese companies and demands from Tokyo that its citizens be protected.

On a trip to Tokyo today, U.S. Defense Secretary Leon Panetta said the he was "very concerned" after demonstrators took to the streets yesterday in a dozen cities across China in the biggest protests since 2005, and urged the two sides to resolve the dispute via diplomacy. In Shenzhen, police used tear gas and water cannons to stop protesters from reaching a Japanese department store, Radio Television Hong Kong reported.

The protests have further strained ties between Asia's largest economies and may hurt the two countries' ability to fight an economic slowdown. The standoff is also playing out amid China's once-a-decade leadership transition, conducted behind closed doors, and the political fallout from the ouster of Chongqing Party Secretary Bo Xilai earlier this year.

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