* S.Korea, Japan locked in worsening row with historic roots
* S.Korea displays F-35 jets seen by N.Korea as a threat (Updates with date for N.Korea-U.S. working-level talks, S.Korea's defence ministry statement)
By Joyce Lee
SEOUL, Oct 1 (Reuters) - South Korean fighter jets flew a patrol on Tuesday over islands at the centre of a dispute with Japan, South Korean President Moon Jae-in said at an event marking the founding of his country's military, drawing an angry Japanese protest.
South Korea showcased newly acquired F-35 stealth fighter jets to mark its Armed Forces Day as Moon tried to allay concerns that his policy of engagement with neighbouring North Korea would weaken the South's commitment to defence.
He said the F-15K jets patrolled over the disputed islets called Dokdo in Korea and Takeshima in Japan, which are controlled by Seoul but claimed by both, risking inflaming strained ties between the neighbours.
"Just a moment ago, the F-15K, the most powerful fighter-bomber in Northeast Asia, has returned from completing a patrol mission over our land Dokdo ... without any problems," Moon told the military in a speech.
South Korea's defence ministry clarified that two of the four jets participating in the patrol flew over the islands.
Japan strongly protested against the flight, one of its foreign ministry officials told Reuters on condition of anonymity.
The Japanese official said the islands belonged to Japan historically and under international law and the patrol was unacceptable and deplorable, adding that Japan had asked South Korea not to conduct the flights.
South Korea's defence ministry said in a statement Japan had summoned a South Korean military officer to make its "unfair claims" over the islets.
On Friday, South Korean officials had protested over Japan's annual defence review that referred to Japan owning the islands. The foreign ministry summoned a military official at the Japanese embassy in Seoul to demand an immediate retraction.
The neighbours have been locked in a worsening diplomatic and trade row rooted in wartime history and disagreements over compensation for forced labourers during Japan’s 1910-1945 occupation of Korea.
After Japan tightened curbs on exports of high-tech materials vital to South Korea's chip and display industries in July, each has stripped the other of fast-track trade status.
In addition, South Korea decided in August to terminate an intelligence-sharing pact with its neighbour.
Only when Japan's "unfair export control measures are resolved" will South Korea consider renewing the pact, foreign ministry spokesman Kim In-chul told a news briefing on Tuesday.
In July, a Russian military aircraft twice violated airspace over the disputed islands and drew hundreds of warning shots from South Korean jets, South Korean officials said, during what Russia said was a long-range joint air patrol with China.
Japan, which said it also scrambled fighter aircraft at the time, lodged a complaint with both South Korea and Russia over the incident.
The islands had 28 South Korean residents as of Tuesday, according to South Korean police.
Moon marked Armed Forces Day at a ceremony at a base in the city of Daegu where four of the eight Lockheed Martin F-35A jets delivered this year were displayed. Forty of the aircraft are to be delivered by 2021.
He made no direction mention of Japan or North Korea in his address, but said the security climate was highly unpredictable, requiring strength as well as innovation.
"As the recent drone attack in the Middle East demonstrated to the world, the challenges we will face will be entirely different from those of the past," he said.
North Korea has criticised the South's weapons procurements and its joint military drills with the U.S. military as undisguised preparations for war that are forcing it to develop new short-range missiles.
Moon has thrown his support behind talks to end the North's nuclear and ballistic missile programmes, urging it to talk to the United States.
North Korea's state news agency KCNA said on Tuesday North Korea and the United States had agreed to hold working-level talks on Oct. 5.
Analysts have said the F-35 stealth jets put North Korea's anti-aircraft and anti-missile defence systems in a vulnerable position.
Reporting by Joyce Lee; Additional reporting by Sangmi Cha in Seoul and Linda Sieg in Tokyo; Editing by Raju Gopalakrishnan and Clarence Fernandez