Taiwan Imposes Sanctions on Philippines Over Killing

* Taiwan rejects Philippine apology as inadequate

* Taiwan recalls its envoy to Manila

* U.S. expresses concern over tensions

Taiwan imposed sanctions against the Philippines on Wednesday, rejecting as unacceptable a Philippine apology for the killing of a fisherman from Taiwan last week.

The row is the latest flare-up in tension in Asian seas where disputes in various places between various countries have raised fears of conflict in the economically vibrant region where competition for resources is intensifying.

Earlier on Wednesday, Taiwan recalled its envoy to the Philippines. The sanctions included the freezing of applications for work permits, the cessation of economic exchanges and military exercises in waters between the two sides.

A spokesman for Philippine President Benigno Aquino had said a formal apology was being offered to the "appropriate authority" in Taiwan over the "unfortunate loss" of the fisherman.

But Taiwan's Premier Jiang Yi-huah said the apology was inadequate because it called the fisherman's death unfortunate and unintentional, according to a statement from the Taiwan government on its website.

"We can absolutely not accept this," Jiang was quoted as saying.

The fisherman was killed in a shooting last week by the Philippine coastguard in waters off the northern Philippines. Taiwan said the killing took place in its exclusive economic zone and was a violation of international law.

A Philippines fisheries official said earlier one of its vessels, acting under the threat of being rammed, opened fire last Thursday on a Taiwanese fishing boat about 170 nautical miles southeast of Taiwan, killing one person on board.

Taiwan had issued an ultimatum to the Philippines to apologise to the man's family.

A Taiwan Defence Ministry official said military vessels and aircraft would be dispatched to the Bashi Channel between Taiwan and the Philippines for a two-day military drill.

Philippine presidential spokesman Edwin Lacierda told a news conference in Manila an apology was being offered and he appealed to Taiwan not to take out its anger on the more than 85,000 Filipinos working in Taiwan, many as domestic workers.

"We understand the grief and hurt of the family and of the people of Taiwan over this unfortunate loss and we empathize with them," Lacierda said, appealing for "calm and sobriety".

"Let us not involve our Filipino compatriots there. They are there working and they are there working for an honest living".

Philippine President Benigno Aquino had ordered a "thorough, exhaustive, impartial and expeditious investigation" into the shooting, Lacierda said.

In Washington, the United States expressed concern over the increase in tensions between two of its allies and called on both sides to quickly work to resolve their differences.

"We urge the Philippines and Taiwan to take all appropriate measures to clarify disagreements and prevent recurrence of such tragic events," State Department spokesman Patrick Ventrell told a news briefing.

"We continue to urge both parties to ensure maritime safety and refrain from actions that could further escalate tensions in the region and undermine prospects for a rapid and effective resolution of differences," Ventrell added.

The Philippines and Taiwan, as well as China, Brunei, Malaysia and Vietnam, are embroiled in disputes over territory in the nearby South China Sea, potentially rich in oil and gas and criss-crossed by crucial shipping lanes.

The disputes have sometimes escalated to confrontation between vessels.

To the north, China and Japan, and Japan and South Korea, are involved in different disputes over small islands. Fears of confrontation have grown there too over the past year.

--Reporting by Clare Jim and Christine Lu in Taipei and Manuel Mogato in Manila; Writing by Ben Blanchard; Editing by Robert Birsel