AFP/ Seoul

A Japanese journalist was acquitted Thursday of defaming South Korean President Park Geun-Hye over his report on her whereabouts following a fatal ferry disaster, in a case that strained diplomatic relations.

Tatsuya Kato, former Seoul bureau chief for Japan's Sankei Shimbun daily, was put on trial in December last year on a charge of criminal libel for an article he wrote questioning where Park was on the day the Sewol passenger ferry sank, killing 300 people.

The article picked up unproven rumours circulating in the South Korean media that the unmarried Park had disappeared for a tryst with her former aide at the time of the disaster.

A Seoul court said Thursday Kato's article had damaged Park's reputation as an individual, but accepted his argument that it was intended to serve the public interest and found him innocent of the charge.

"The court declares the accused was not guilty of defaming Park in her capacity as the president," the Seoul Central District Court said in the verdict. 

It added the freedom of the press "must be respected to the full" for the development of democracy, although the rumours over Park's whereabouts were "false."

Seoul prosecutors had demanded a guilty verdict and an 18-month jail term for Kato, arguing he had intended to defame Park.

After being banned from leaving South Korea for nine months, Kato was finally allowed to return to Tokyo in April, and kept his word to present himself to the court for the verdict.

The trial had further irritated already inflamed ties between the South and its former colonial power Japan, which have for decades bickered over history and territorial disputes.

Relations have showed signs of improvement in recent months, including with a summit between Park and Prime Minister Shinzo Abe in Seoul last month.  

Abe said Thursday he hoped the verdict would help push Japan-South Korea relations forward.

Abe told reporters in Tokyo that he welcomed the verdict, saying he was hoping that the acquittal would have "positive effects" on ties. 

Seoul also voiced hope for an improvement in relations.

"With a burden caused by the trial removed, we hope that (the verdict) will become an opportunity to improve bilateral relations," said a foreign ministry official who declined to be named.

The Sankei -- a robust centre-right daily -- has suggested it was being singled out by South Korean authorities for its campaign to reverse a Japanese apology for forcing Korean women into brothels during WWII.