Japan on Tuesday signed a controversial free trade deal with Thailand, which hopes to hearten foreign investors unnerved since thekingdom'scoup.

The deal slashing more than 90 percent of tariffs had been in doubt for months due to Japan's uneasiness over the military takeover and street protests by activists in Bangkok.

Easing the kingdom's isolation, Thailand's army-installed Prime Minister Surayud Chulanont paid his first visit to a Group of Eight nation since the coup to sign the deal with his counterpart Shinzo Abe.

"For Thailand, our relations with Japan are of the greatest strategic importance," Surayud said.

Surayud hopes the pact with Thailand's largest investor will ease worries in the business community about the junta's protectionist policies. The deal exempts Japan's existing investments from new currency controls that briefly sent the Bangkok market into a tailspin in December.

But hours before the signing, demonstrators burned a mock free-trade agreement in front of the Japanese embassy in Bangkok, holding a banner that said, "Free Trade Agreement with Japan is horrible. Itonly benefits Japan."

The agreement was negotiated by Thailand's elected prime minister Thaksin Shinawatra, whom the army ousted in September, accus-

ing him of corruption.

Free-trade negotiations between Thailand and the United States have stalled since the coup and Surayud has yet to visit any Western countries as premier.

Japan said it was not ignoring concerns. A foreign ministry official said ahead of the summit that Abe would likely call "an early return to normal democracy" during talks with Surayud.

Under the agreement, about 97 percent of Japanese exports to Thailand and 92 percent of Thai exports to Japan will be tariff-free within 10 years.

Tokyo eyes FTAwith US, ROK Another report from adds: Japan said Tuesday that it will study a free-trade agreement with the United States and aims to restart trade talks with South Korea, a day after its two trading partners struck a landmark deal.

"We need to study the advantages and problems (of a Japan-US free trade agreement) from the point of view of all Japanese people," Economic and Fiscal Policy Minister Hiroko Ota told reporters.

Japan, the world's second largest economy, has been seeking a growing number of bilateral free-trade deals amid the breakdown in global liberalisation talks. It has already inked trade pacts with Thailand's neighbour Malaysia as well as Singapore and the Philippines.