BEIJING â€"  The leaders of China, South Korea and Japan said Sunday that they will work together to try to calm tensions on the Korean peninsula. The three largest East Asian economies also took steps toward deepening their economic ties by laying the groundwork for a regional free trade area.

The nations -- which together account for 90 percent of the East Asian economy -- were holding their fifth annual trilateral summit, with Chinese Premier Wen Jiabao hosting, and South Korean President Lee Myung-bak and Japanese Prime Minister Yoshihiko Noda attending.

Lee said the three countries all agreed that any further provocations from North Korea would be unacceptable.

A failed rocket launch by North Korea last month drew sanctions from the U.N. Security Council, and there are now fears Pyongyang is preparing to conduct its third nuclear test. China -- a permanent member of the U.N. Security Council -- is North Korea's closest diplomatic ally.

"The pressing task is to try our best to prevent tensions on the Korean peninsula from escalating," Wen said. He urged all parties to "return to the right track of dialogue and negotiations."

Noda said Beijing, Tokyo and Seoul should work together to try to prevent further provocations by North Korea.

Lee, meanwhile, said South Korea was pleased that China has been urging North Korea to improve the living standards of its people.

The summit -- which followed a meeting among the three nations' economic and trade ministers -- also saw the signing of an investment agreement, paving the way for the setup of a free trade area among the three nations.

The leaders agreed that negotiations for the free trade area should begin by the end of the year.

The initiative comes amid a slow global economic recovery.

"In times of crisis, if countries, for their own survival, carry out protectionist ideas, then the recovery of the economy will take a long time," Lee said.

Wen said the regional pact -- which exists in several other parts of the world -- would benefit the East Asian countries at a time of rising trade protectionism around the world.

"The establishment of (a free trade area) will unleash the economic vitality of our region and give a strong boost to economic integration in East Asia," Wen said.

Noda said the economic cooperation among Japan, China and South Korea was crucial in ensuring the Asia-Pacific region remain the growth center of the world economy.

Trade among the three countries grew to $690 billion in 2011, and China is the biggest trade partner for both South Korea and Japan, according to a Chinese government report on the three-nation relationship.

The investment agreement -- the first such document among the three nations -- will stimulate further investment and promote additional trade, the Chinese Commerce Ministry said in a statement.