By Jane Macartney

BEIJING, Sept 17 (Reuter) - Beijing warned on Tuesday that foreign leaders who meet Tibet's exiled spiritual leader, the Dalai Lama, would see trade and business ties with China suffer.

But Australian Prime Minister John Howard was defiant and said he would meet the exiled Tibetan leader and 1989 Nobel Peace Prize winner in Australia next week if schedules permit.

"About the leaders of some countries meeting the Dalai Lama, this is interference in China's internal affairs," Foreign Ministry spokesman Shen Guofang told a regular news briefing.

"(This) will influence relations between the two countries and unavoidably have an unfavourable influence on economic and trade relations between the two countries," Shen said when asked about a possible meeting between the Dalai Lama and the Australian prime minister.

"Countries, including Australia and New Zealand, should be clear-minded about the Dalai Lama who deceives international opinion and the leaders of some countries," Shen said.

The Dalai Lama, in Australia for a two-week visit, urged Canberra on Monday to press China to open talks on regional autonomy for the vast but sparsely-populated area of Tibet.

China routinely opposes all overseas tours by the Dalai Lama, who has been in exile since an abortive uprising against Chinese rule in Tibet in 1959, and who won the 1989 Nobel Peace Prize for his peaceful campaign for Tibetan autonomy.

Beijing charges the Dalai Lama is not a religious representative but a political activist who is trying to split China. Last week it said his recent visit to New Zealand would damage relations with Wellington.

"During talks with our central government, he (the Dalai Lama) never gave up his stance of splitting Tibet (from China)," Shen told reporters in Beijing.

Howard stood firm on the right to meet Tibet's exiled spiritual leader.

"I have explained to the Chinese authorities that naturally the Australian prime minister decides according to Australian interests who the Australian prime minister sees," Howard said during a visit to Jakarta.

"I understand the sensitivities of the Chinese government and I also understand the Dalai is a religious leader who has been to Australia before," Howard said.

"We have a proper reputation as a country of religious and political tolerance and in that context the meeting between us, if it can be arranged, will take place," he said.

Australian government sources in Canberra told Reuters a meeting between Howard and the Tibetan god-king was likely.

Earlier on Tuesday, the Foreign Ministry expressed regret over the Dalai Lama's Australian visit.

"With regard to the Australian side... allowing the Dalai Lama to visit and arranging meetings with senior government officials, we express deep regret and strong dissatisfaction," a Foreign Ministry spokesman said by telephone.

China maintains it has ruled Tibet for centuries. But many Tibetans dispute this, and the region has been rocked by periodic outbursts of separatist violence.

Australian Foreign Minister Alexander Downer met the Dalai Lama on his arrival in Sydney on Saturday night, although Downer said the talks were unofficial.

The Dalai Lama flew into Canberra on Tuesday and was greeted by some 300 supporters waving Tibetan flags and pro-independence banners. About 100 supporters held a protest outside parliament, demanding Howard meet the Dalai Lama and support his cause.

Australia exported a total A$3.1 billion (US$2.4 billion) worth of goods to China in calendar 1995 and imported A$3.8 billion worth from China for a A$737 million trade deficit.

Australia's main export to China was wool, accounting for about 22 percent of Australia's total wool exports.