"...We have been able to secure a position equivalent to a sub-host of the project. We will become a hub of international research, just as important as Europe," said Science Minister Noriaki Nakayama in a statement.

"I believe this and other terms should allow us to fully secure our national interests."

Nakayama was Tuesday attending a ministerial meeting in Moscow which grouped representatives from the European Union, the United States, Russia, Japan, South Korea and China.

At the meeting officials unanimously agreed to site the 10-billion-euro (12-billion-dollar), 30-year project at Cadarache in southern France rather than in Japan.

Resource-strapped Japan is keen on developing the cleaner and safer next-generation source of energy -- nuclear fusion -- which is the core technology of the ITER project.

Existing nuclear power generation is based on nuclear fission.

"We are half happy, half sad. But we will move on, go beyond this sadness. Japan will contribute and will be at the center of development of new energy," Nakayama told a news conference in Moscow, according to the Jiji Press news agency.

Japan tried for three years to have the project sited at Rokkasho-mura in Aomori prefecture in northern Japan, in an effort supported by the United States and South Korea.

The French location was favoured by Russia and China.

"We made the decision (to drop our bid) based on the broader view as we believed that the ITER project must begin as soon as possible for the future of mankind," Nakayama said.

Aomori Governor Shingo Mimura said Japan had lost a great chance to make an international contribution on energy and the environment. "It was really regrettable but we have to face it as a fact."

The biggest business lobby Nippon Keidanren also expressed disappointment but said the country "should proactively contribute to this project."

Nakayama said Japan made the deal to maintain the six-party framework and because it had concluded that it would be unable to shoulder a further financial burden to host the project.

"There is a saying: 'Lose a dime and win a dollar'. We must not let the six-party framework break apart. The compromise to give up the site is a form of international cooperation," he told reporters.

The Japanese foreign ministry said Japan and Europe had been able to negotiate terms so that "both sides can become winners".

Under a separate deal between Japan and Europe, Japanese firms are entitled to supply 20 percent of the equipment needed for the project in exchange for Tokyo's 10 percent contribution to the total construction cost, a senior science ministry official said.

As host, France will have to pay 50 percent of the cost while French companies will be allowed to supply 40 percent of the equipment.

"This deal should somehow make up for the loss of not being the host country," Toichi Sakata, director general of the research and development bureau at the science ministry, told reporters in Tokyo.

"Considering the importance of the participation of researchers (in accumulating technological knowledge), the term that says Japan will provide 20 percent of the total staff is also beneficial," said Sakata.

He said major research facilities other than the reactor will be located in Japan, which should help its young scientists gain experience in the state-of-the-art research on nuclear energy.

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