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UPDATE 1-Japan foreign minister says to discuss wartime labour issue with S.Korean counterpart

S.Korean counterpart@ (Adds comments from Motegi)

NAGOYA, Japan, Nov 23 (Reuters) - Japan's foreign minister said he plans to discuss the contentious issue of wartime labourers on the Korean peninsula at a meeting with his South Korean counterpart on Saturday, a day after Seoul retained an intelligence-sharing deal with Tokyo.

The comments from Toshimitsu Motegi are the latest indication the two U.S. allies are moving to improve ties, which have been at their worst in half a century over the issue of forced labour on the Korean peninsula during World War Two.

"I aim to hold a candid exchange of views on the matter of labourers from the Korean peninsula, which is the core problem, and other bilateral issues," Motegi told a news conference concluding the G20 foreign ministers' meeting in the central city of Nagoya.

South Korea made a last-minute decision on Friday to stick with its critical intelligence-sharing deal with Japan, a dramatic reversal after months of frigid relations complicated by their painful history.

The decision was welcomed by Washington. The United States has pressured its two allies to set aside their feud and maintain the General Security of Military Information Agreement (GSOMIA), seen as linchpin of trilateral security cooperation. (Reporting by Kiyoshi Takenaka; Writing by David Dolan; Editing by Neil Fullick and Muralikumar Anantharaman)