The Association of Southeast Asian Nations (ASEAN) summit in Vietnam's capital Hanoi also takes place against a backdrop of increasingly assertive behaviour by China which has put the region on edge.

The gathering of the 10-member ASEAN bloc shifts gear Saturday when it widens into the 16-nation East Asia Summit, also taking in Australia, China, India, Japan, South Korea and New Zealand.

Talks mooted between Chinese Premier Wen Jiabao and his Japanese counterpart Naoto Kan are in doubt after the two nations became embroiled in their worst diplomatic row in years, centred on a disputed East China Sea island chain.

A meeting scheduled for Friday between the economic ministers of Japan, China and South Korea has already been cancelled, casting further doubt on the two-way talks between Asia's biggest powers.

A Japanese trade ministry official blamed the cancellation on scheduling problems, but Kyodo news, citing government sources, said China axed the talks due to a spat over its export restrictions on rare earth minerals.

In a parallel issue, the United States and Southeast Asian countries are concerned over China's robust approach to maritime sovereignty in the South China Sea, where several nations are claimants.

"We must ensure that this does not become an issue that is going to burden ASEAN, that creates the impression as if our region is afflicted by tensions, by competitions," Indonesian Foreign Minister Marty Natalegawa said Wednesday.

ASEAN has a policy of non-interference in members' affairs but some of its stronger democracies have spoken out on Myanmar after coming under pressure to act over the November 7 polls, which have been widely derided as a sham.

"There is a perception of a credibility deficit but it's not too late, we think, to try to address that," Natalegawa said Wednesday. "But I wouldn't want to belittle the kind of efforts that we need to make."

The ballot is the country's first in two decades but has been discredited by the exclusion of opposition leader Aung San Suu Kyi who is under house arrest -- a measure due to end days after the election.

Asked how hopeful ASEAN was that the elections would be credible, Philippine Foreign Secretary Alberto Romulo replied: "We will see."

When questioned about a push for Myanmar to permit foreign observers to supervise the voting, he said Wednesday that was "not the point".

"The point is, will there be credible elections if Aung San Suu Kyi and the others are not part of it? It's not the observers, it's the participation of all," he said.

Western governments as well as United Nations Secretary General Ban Ki-moon -- who holds talks Friday with ASEAN leaders -- have repeatedly said the vote will not be credible unless Suu Kyi and other opponents are freed.

The UN chief has expressed his growing "frustration" with the Myanmar junta in recent weeks and called on its neighbours to be more aggressive with its pariah neighbour or risk tarnishing their own democratic credentials.

The summit is also expected to sound the alarm over the "currency war" that has sent exchange rates and share prices rocketing in the region's emerging economies.

While China has kept a tight grip on the yuan, Japan and emerging Asian economies have seen their currencies soar against the US dollar, making their exports less competitive and inviting a massive inflow of foreign capital.

"These issues need to be discussed in the context of ASEAN and ASEAN+6, where member countries could fashion a common approach to these regional challenges," the World Bank said in a report last week.

But coming up with a regional response at the three-day summit which begins Thursday could prove challenging.

Capital inflows push Asian currencies higher still and have led to steep gains in stocks and property prices, fuelling fears of higher inflation and speculative bubbles that could burst if the money exits as fast as it arrived.

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