Tokyo (CNN) -- The widening fallout from an increasingly volatile territorial dispute between China and Japan prompted a Japanese company to halt work at plants in China on Monday, and the United States to urge the two sides to avoid letting the situation spiral out of control. The electronics company Panasonic said Monday that it was suspending operations at three plants in China after two of them were damaged amid violent anti-Japanese protests set off by the clash between Beijing and Tokyo over a group of small islands in the East China Sea. Japan calls the islands Senkaku; China calls them Diaoyu.
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NEW: Panetta urges both sides to "avoid further escalation"
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Two Panasonic factories are damaged from anti-Japanese protests, the company says
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Demonstrations in China over the weekend turned violent at times
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Tensions have risen between Tokyo and Beijing over a disputed set of islands
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@placeholder declared the purchase to be "illegal" and sent six surveillance vessels to carry out patrols on Friday around the remote islands in an effort to underscore its claim to sovereignty.
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Messages and photos posted on @placeholder social media sites showed angry mobs in numerous cities ransacking Japanese stores and restaurants as well as smashing and burning cars of Japanese make.
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The @placeholder tone of the protest was clear from the slogans and images on display, he added.
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Japan's attempts to portray the purchase as a routine internal real-estate transaction, with the islands passing from one Japanese owner to another, has failed to placate the @placeholder authorities.