CORRECTED - CORRECTED-UPDATE 3-Japan, China settle East China Sea gas feud -

(Corrects paragraph 3 to ...92 million ..., not 180 million) (Adds Japan government spokesman comment)

By Linda Sieg

TOKYO, June 16 (Reuters) - Japan and China have agreed to jointly develop gas fields and share profits in disputed areas of the East China Sea, Kyodo news agency reported on Monday, but Japan's government said final details were being worked out.

The reported accord follows a May summit between Japanese Prime Minister Yasuo Fukuda and Chinese President Hu Jintao at which the two leaders agreed to settle the long-running gas feud.

Estimated net known reserves in the disputed fields are a modest 92 million barrels of oil equivalent, but both countries have pursued the issue as there may be a lot more yet to be found.

The dispute has come to symbolise more than an argument over maritime gas rights by the two energy-hungry countries, because it concerns matters of territory and sovereignty.

Quoting sources close to Japan-China relations, Kyodo said the two sides had decided to set aside the territorial feud for now and agree on joint gas field development.

"If it is true, this is a great leap forward," said Phil Deans, a professor of international affairs at Temple University in Tokyo. "Two years ago, the two sides were so entrenched and incapable of compromise, it looked as if they were never going to get anywhere."

Sino-Japanese ties chilled during Junichiro Koizumi's 2001-2005 tenure as Japan's prime minister, partly because of his visits to a war shrine seen in Beijing as a symbol of Tokyo's past military aggression in China in the 1930s and 1940s.