Japanese Prime Minister Shinzo Abe is unlikely to meet South Korean President Moon Jae-in during the United Nations General Assembly in September, the Sankei newspaper said on Monday, the latest sign of strained ties between the key US allies.

Abe will not hold talks with Moon unless Seoul takes constructive steps over World War II era forced labor and other issues, the paper said.

He will also forgo meeting Moon at an October meeting of the Association of Southeast Asian Nations and an Asia-Pacific Economic Cooperation gathering in November, the paper added.

The leaders did not meet during June's Group of 20 summit in Japan's western city of Osaka.

Separately, Korean Air Lines said it would suspend flights between the South Korean city of Busan and Sapporo in northern Japan from September 3 because of falling demand amid the worsening diplomatic row that has spurred boycotts of Japanese goods and services, from beer to travel.

Relations between the Asian neighbors are arguably at their lowest ebb since they normalized ties in 1965.

Japan tightened restrictions on exports to South Korea of key high-tech materials in making memory chips and display panels, accusing its neighbor of inadequate management of sensitive items.

But the curbs were also seen as retaliation against last year's ruling by the South Korean Supreme Court for Japanese companies to compensate Korean wartime forced labor.

Japan says the court's decisions violate international law because compensation was settled under the 1965 treaty.

At a briefing on Monday after returning from a US trip, South Korean Trade Minister Yoo Myung-hee said she told American officials that Japan's moves set a very dangerous precedent for using trade measures as a tool to resolve political issues.

Adding to the export curbs, Japan is preparing for cabinet approval as early as Aug. 2 to drop South Korea from a so-called white list of countries with minimum trade restrictions, Japanese media have said.

South Korea has protested against the plan, saying it would undermine the neighbors' decades-old economic and security cooperation and threaten free trade.