Waving banners and signs and chanting anti-Japan slogans, thousands of protesters marched in Seoul on Saturday to express their anger at Japan's decision to downgrade the Republic of Korea's trade status amid an escalating diplomatic row.

Huge crowds swarmed the streets in front of the Japanese embassy, carrying signs that read "Boycott Japan" and "No Abe", referring to Japanese Prime Minister Shinzo Abe. They shouted "We condemn the Abe government" and "Let's end humiliating South Korea (ROK)-Japan relations".

The protesters later marched to a nearby boulevard for a candlelight vigil, also calling for the Seoul government to end a military intelligence-sharing pact with Tokyo and fully discard a 2015 deal between the countries over compensating ROK women who were forced to work in Japan's World War II military brothels.

Police didn't immediately provide a crowd estimate, but organizers said about 15,000 people participated in the rallies.

The protest came a day after Japan's Cabinet approved the removal of the ROK from a list of countries with preferential trade status, which would require Japanese companies to apply for case-by-case approvals for exports to the ROK of hundreds of items deemed sensitive.

The decision followed a July measure to strengthen controls on certain technology exports to ROK companies that rely on Japanese materials to produce semiconductors and display screens used in smartphones and TVs, which are key ROK export products.

Seoul says the Japanese trade curbs could hurt its export-dependent economy and has accused Japan of weaponizing trade to retaliate over bilateral disputes stemming from their bitter wartime history.

A senior ROK official also said on Saturday that Seoul is exploring all options in the trade dispute including scrapping an intelligence sharing pact.

In Japan, a controversial statue symbolizing "comfort women" was withdrawn from an art exhibition on Saturday after organizers received security threats.

Comfort women is a euphemism for those, many of them Korean, forced to work in Japan's World War II military brothels and is a highly emotional topic for people of both countries.

Japan says the issue was settled by past agreements and apologies but many ROK citizens say Japan did not go far enough and have demanded further compensation for victims. The current flare-up over the issue comes during the recent trade dispute between the countries.

Statue of a Girl Of Peace attracted a flood of complaints since Aichi Triennale, an international art exhibition being held in central Japan, opened just three days ago, organizers said.

The festival decided to remove the statue after it received "terror threats" by telephone and e-mail, Aichi Governor Hideaki Omura told a news conference on Saturday.

"Yesterday we also received a fax saying, 'Get rid of it fast or else I'm going to bring a can of gasoline and cause some trouble,'" Omura said.