Malaysian and Japanese officials have yet to resolve differences over the auto and steel sectors which are seen as major obstacles to progress towards a free trade agreement, said an official.

"Nothing has been concluded," an official familiar with talks being held behind closed doors in Putrajaya told AFP . The talks began on Tuesday and ended late yesterday.

A new round of talks may resume in Japan next month, he said, adding that the two countries would have to come up with a new set of proposals.

Earlier this month, Japan and Malaysia agreed to reach a basic agreement by the end of May but the two countries remained divided on the auto sector as Malaysia was reluctant to review its policy to protect its domestic industry.

They were also trying to narrow differences in such areas as auto parts, steel and investment and services.

The two governments, which started talks on an FTA in January last year, have so far worked out the framework of free trade rules in agricultural and marine products.

When Malaysian International Trade and Industry Minister Rafidah Aziz met her Japanese counterpart Shoichi Nakagawa last month, she expressed hope the two countries would formally sign an FTA in December.

Prime Minister Abdullah Ahmad Badawi is due to visit Tokyo on May 25-26.