* North Korea's leader meets top Chinese offocial
* U.S. urges Seoul to show restraint, to avoid escalation
* US military chief says China must do more to stop North
* North defends island attack, says it owns island
(Adds China, North Korea meeting)
By Jeremy Laurence and Paul Eckert
SEOUL/TOKYO, Dec 9 (Reuters) - China and its ally North Korea reached a consensus on the Korean peninsula crisis after "candid" talks in Pyongyang between Beijing's top diplomat and North Korean leader Kim Jong-il, Chinese state media reported.
State Councilor Dai Bingguo met the isolated North's ailing leader in the capital Pyongyang for talks and "the two sides reached consensus on bilateral relations and the situation on the Korean Peninsula after candid and in-depth talks," Xinhua news agency said.
North Korea's KCNA news agency said the talks were "held over the issue of boosting the friendly and cooperative relations between the two countries and a series of issues of mutual concern."
Neither gave any further details.
But the United States has repeatedly called on Beijing to bring its ally to heel after the North bombarded a South Korean island last month, killing four people, and revealed advances to its nuclear programme opening another route to make an atomic bomb.
"Much of that volatility is owed to the reckless behaviour of the North Korean regime, enabled by their friends in China," Admiral Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, told a news conference in Tokyo.
The South has vowed to hit back hard against its neighbour if Pyongyang orders a repeat of last month's attack, bolstering its defences in the disputed West Sea area and amending military rules of engagement to permit the use of fighter jets and bombs.
"I actually believe that because these provocations continue, and seemingly at a more frequent interval, that the danger is going up and that steps must be taken to ensure that they stop," Mullen said
Last month's attack on Yeonpyeong island, the first of its kind against civilians on South Korean soil since the end of the 1950-53 war, coupled with the North's revelations of nuclear advances, have boosted tension on the divided peninsula.
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Mullen also said that the United States wants sustainable military ties with China, instead of on-and-off contact. At the same time, Beijing said it had sent General Ma Xiaotian, deputy chief of general staff of the People's Liberation Army, to the United States for military-to-military talks.
Mullen justified staging joint military exercises with South Korea off the west coast of the peninsula, saying the Yellow Sea is free waters where the U.S. military has operated and will continue to do so.
A U.S. military official said Washington was encouraging Seoul to think strategically and in the long-term rather than focusing on tit-for-tat retaliation.
"Any actions that are taken -- actions, reactions -- have to be done very carefully to make sure that we don't escalate, that they are proportional, and at the same time send a very strong signal that the provocations must cease," Mullen said.
Analysts say Pyongyang will likely stage further, possibly bigger incidents, in the future to cement a leadership transition from ailing leader Kim Jong-il to his son. They say the North, which has a military-first policy, also stages what they call "provocations" to extract concessions at multilateral talks.
(Editing by Jonathan Thatcher) (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)
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