Japan yesterday offered a "heartfelt apology" and a one-billion yen (USD 8.3 million) payment to surviving South Korean "comfort women" forced into Japanese military brothels during World War II.
Abe, himself a nationalist who came to power three years ago vowing to revitalise Japan's economy and revise its war-renouncing constitution, has praised the agreement as heralding a "new era" for relations.
Ties between Tokyo and Seoul have long been soured by the sex slave issue, a legacy of Japan's colonial rule over the Korean peninsula and of World War II.
Demonstrators, mostly in their 60s or older, sang "Kimigayo," the national anthem which is an ode to Japan's emperor, and carried red and white national flags.
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"We will never allow this quislingism," participants at the rally outside the compound housing Abe's official office and residence chanted in unison, calling him a traitor.
"Reverse this disgraceful act," they yelled.
"Abe, you stained the spirit of the war dead!" one woman shouted.
Satoru Mizushima, a rally organiser, told AFP: "The agreement is going to be Japan's worst blemish. Prime Minister Abe did what he should not do. It was so deplorable."
The crowd then moved to the foreign ministry for a similar rally.