Japanese Prime Minister Shinzo Abe on Sunday called the apparent killing of a Japanese captive by Islamic State militants "outrageous and impermissible," and again called for the group to release the second Japanese national they are holding.

Abe, speaking to public broadcaster NHK, said chances were high that a recording and an image of what appeared to be the decapitated body of captive Haruna Yukawa, which emerged late on Saturday, were authentic.

The Japanese leader called for the immediate release of the remaining Japanese captive, reporter Kenji Goto, and said he was putting top priority on saving Goto's life.

But he reiterated that Japan would not give in to terrorism.

"Such an act of terrorism is outrageous and impermissible, which causes me nothing but strong indignation," Abe said.

"Again, I strongly demand that Mr. Kenji Goto not be harmed and be immediately released. The government of Japan will, in its entirety, do its utmost in order to have him released."

The sudden escalation of the hostage crisis has become a test for Abe and the dominant news story in Japan since Tuesday, when Islamic State militants released a video showing Goto and Yukawa kneeling with a knife-wielding, masked man demanding a $200 million ransom for their release. The 72-hour ransom deadline set in the first video expired on Friday.

In the latest apparent recording, Goto says Yukawa was "slaughtered in the land of the Islamic Caliphate." But the journalist said the Japanese government could save him by working through Jordan where Abe earlier this week set up an office to coordinate the government's response to the hostage situation.

Goto says the militants would free him in exchange for the release of Sajida al-Rishawi, an Iraqi held in Jordan. He says the militants have dropped the ransom demand.

"PAINED"

"I am filled with disappointment, that it has finally come to this," Yukawa's father, Shoichi, told NHK. "I feel pained, that he (Goto) risked his life out of concern (for my son) and ended up being captured. I hope he can be released as soon as possible, and return to Japan to continue his activities."

Goto's mother, Junko Ishido, told NHK: "Of course, first of all, I wish it weren't true, that it's some mistake. I'm a mother so it's unbearable. What I want to tell Islamic State is that Kenji's ideal is world peace."

More than 100 people, some wiping away tears, congregated on Sunday at Denenchofu Protestant evangelical church in an upscale neighbourhood of Tokyo, where Goto was baptized in 1997 and where he prayed just days after Yukawa was captured in August.

Three policemen stood guard outside the church.

"Please have Kenji Goto and Haruna Yukawa in your thoughts as we go through today's prayers," Pastor Shun Takatsu said.

Abe told NHK that he had spoken to Jordan's King Abdullah about the situation, but he had no comment on the Islamic State demand for the release of al-Rishawi.

Chief Cabinet Secretary Yoshihide Suga told a news conference that Japan was making every effort on the assumption Goto was alive. He said the government had no warning before the new recording emerged.

US President Barack Obama condemned Yukawa's murder in a statement released by the White House, which did not address how Washington had confirmed his killing.

The Obama statement, issued while he was en route to India, said: "The United States strongly condemns the brutal murder of Japanese citizen Haruna Yukawa by the terrorist group ISIL," using an acronym to refer to Islamic State.

HUMANITARIAN AID

Yukawa, 42, was seized by militants in August after going to Syria in what he described was a plan to launch a security company. Goto, 47, a veteran war correspondent, went into Syria in late October seeking to secure Yukawa's release, according to friends and business associates.

The new recording, released on YouTube late on Saturday before being deleted, showed an image of a gaunt Goto in an orange t-shirt with audio of what appeared to be him making a statement in English.

"I would like to stress how easy it is to save my life," the recording says. "You bring them their sister from the Jordanian regime, and I will be released immediately. Me for her."

Al-Rishawi was arrested shortly after she failed to blow herself up in one of three deadly hotel bombings that hit the Jordanian capital in 2005.

Japan paid $6 million to Japanese Red Army hijackers after a 1977 kidnapping, but in recent years has moved toward the U.S. government's hard line against paying ransoms. Finance Minister and Deputy Prime Minister Taro Aso said last week that responding to demands set by the Islamic State would mean "giving in to terrorism".

Japan's pacifist constitution also rules out any military response. A briefing paper prepared for Abe's office on Friday and reviewed by Reuters said Japan would not have the legal authority to strike the Islamic State even after proposed legislation loosening military restrictions that the prime minister is seeking to pass later this year.

Abe has said Japan will press ahead with plans to offer over $200 million in humanitarian aid to help countries combating Islamic State, including aid for displaced refugees.

Abe announced that aid a week ago in Cairo during a trip through the Middle East when he also called Islamic State a threat to the region and to international order.

Abe told NHK that Japan did not intend to join the U.S.-led military operation against Islamic State, but wanted to continue to provide humanitarian aid. The decision by Abe, who took power in 2012 pledging to bolster Japan's global security role, to give aid specifically to countries contending with Islamic State has raised some eyebrows.

"I think it's unavoidable if they (Islamic State) took this as support for their enemies and view Japan as an enemy," Ichiro Ozawa, leader of the small opposition People's Life Party, told NHK, adding the government appeared not to know how to respond.

The Islamic State has executed five British and American aid workers and journalists in recent months. Yukawa's capture by Islamic State fighters outside Aleppo in August was the first time a Japanese citizen has been held by the group.

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