Tokyo and Beijing have been feuding for decades over the island chain, known as the Senkaku in Japan and the Diaoyu in China, near potentially huge maritime gas fields.
Tensions flared last week after seven of a group of 14 Chinese activists slipped past Japan's Coast Guard to land on one of the uninhabited isles and raise a Chinese flag.
Japan, keen to avoid a rerun of a nasty feud that chilled economic and diplomatic ties in 2010, deported the activists within days, but the dispute lingers because of China's bitter memories of Tokyo's past military occupation.
Early on Sunday, 10 members of a group of more than 100 Japanese nationalists who sailed to the island chain swam ashore to one of the islets and waved Japanese flags.
Three Japanese Coast Guard vessels were nearby, a Reuters TV journalist on board one of the boats said.
"I was hoping that someone with a real sense of Japanese spirit and courage would go and land and raise the flag, I just feel they've done a good job," said Kazuko Uematsu, local lawmaker from Shizuoka Prefecture wh o was part of the flotilla.
CHINA'S REACTION
The activists later swam back to their boats and were being questioned by Japanese Customs officials.
"The illegal behavior of Japanese right-wingers has violated China's territorial sovereignty," China's foreign ministry said in a statement.
"An official from the foreign ministry has solemnly expressed to the Japanese ambassador in China (our) strong protest, and urge the Japanese side to stop behaviors that hurt China's territorial sovereignty."
In several Chinese cities, thousands of people took to the streets to protest, including Shenzhen where small groups of demonstrators overturned Japanese cars and shouted slogans denouncing Japan's claims over the islands, in footage carried by Hong Kong's Cable Television.
Police were deployed but mostly allowed the protesters to vent their anger without intervening. Others protesters burned images of Japanese flags and waved banners and China flags. "They (Japan) should return the islands to us and apologise," said a man in the Shenzhen protest.
Japanese news agency Kyodo said protesters numbered in the thousands in the cities of Shenzhen and Hangzhou.
"DON'T MESS AROUND"
Japan's government had denied the group permission to land on the islands, which it leases from private Japanese citizens. "This is a way of saying to not mess around," Toshio Tamogami, a leader of the Japanese group, said before the flotilla set sail on Saturday.
The flotilla includes several members of parliament and local lawmakers.
"We hope to convey ... both to China and the Japanese people that the Senkaku are our territory," Tamogami said.
The renewed maritime tension with China has parallels with Beijing's other recent tangles with Southeast Asian countries over rival territorial claims in the South China Sea.
China's expanding naval reach has fed worries that it could brandish its military might to get its way.
The Sino-Japanese row has intensified in recent months since the nationalist governor of Tokyo proposed that the Tokyo Metropolitan Government buy the isles, prompting the central government to make its own bid to purchase them instead.
Japan's ties with South Korea, where resentment over its 1910-1945 colonisation still remains, have also frayed since South Korean President Lee Myung-bak visited an uninhabited island claimed by both countries.
About 30 South Koreans held a ceremony on Sunday to unveil a monument on one of the barely inhabited islands, which are known as Dokdo in South Korea and as Takeshima in Japan. The 1.2-metre tall monument is engraved with the Korean word for "Dokdo" on the front and "Republic of Korea" in Lee's handwriting on the back.
Japanese Prime Minister Yoshihiko Noda, his ratings in tatters ahead of an election that may come soon, faces domestic pressure to take tough stances with Japan's neighbours over the island disputes.
This is despite deep economic links and efforts by Seoul and Tokyo, both close U.S. allies, to forge closer security ties.
Reuters
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