Its report, which gave no sources, said the meeting should be chaired in the next two days by President Jiang Zemin.

The paper said the meeting of the Communist Party's highest policy-making body was expected to discuss ``countermeasures'' Beijing would take against the Taipei authorities.

Reports from Taipei meanwhile quoted President Lee as saying he was not seeking independence for the nationalist island by insisting it was a separate state from communist China.

``I did not say this to declare independence,'' he said on television to local rotary clubs members visiting his office.

But he reiterated comments which have enraged Beijing, saying in a statement issued by his office that ``authorities here have redefined cross-straitties to `nation-to-nation', or at least `state-to -state'.''

The Straits Times report said China's Politburo meeting would take into account US President Bill Clinton's personal reassurances in his hotline call to his Chinese counterpart on Sunday.

It would also distinguish between a general response to the people of Taiwan and a tougher response to Lee, the newspaper said.

Jiang told Clinton that Beijing was not committed to abandoning the use of force on the issue although he said China wanted peaceful reunification with Taiwan.

Share markets across the region dropped sharply Monday in the wake of Lee's comments despite attempts by Taiwan to patch up the row.

Clinton had telephoned Jiang to reiterate Washington's commitment to a `One China' policy, Xinhua news agency said, which involves supporting the idea of eventual reunification.