The Dalai Lama Tuesday led thousands in prayer in his first big public appearance since arriving in Taiwan, as China signalled its ire by postponing or scaling down planned events with the island.

Tibet's exiled spiritual leader emerged in front of a crowd of more than 10,000 in a stadium in the southern city of Kaohsiung, underlining the devout Buddhism of a large part of the population on the island.

The ceremony at the Kaohsiung Dome was focused on the tragedy which struck last month when Typhoon Morakot swept in from the Pacific, leaving at least 571 dead in its trail.

"My goal here is to seek blessing and ward off misfortune for the typhoon victims," the Dalai Lama said.

The 74-year-old monk has said repeatedly that his visit is non-political, but the trip has nevertheless met strong opposition in China, which sees him as a "splittist" bent on independence for his Himalayan homeland.

From Beijing's perspective, it only makes matters worse that he is now touring an island which it sees as part of its territory, although it has been governed separately since the end of a civil war in 1949.

The Chinese view is supported by small but vocal groups in Taiwan, and Tuesday morning protesters favouring Taiwan unification with the mainland appeared in Kaohsiung, engaging in shouting matches with Dalai Lama supporters.

However, few of the believers inside the Kaohsiung Dome appeared to be thinking about politics.

"I'm very moved that the Dalai Lama has come to Taiwan to visit the typhoon victims," said Vivien Cheng, a bank employee.

A Kaohsiung resident who was pushing his wheelchair-bound wife had a very specific reason to be at the prayer.

"We're here to seek blessings before my wife's cancer surgery," said the man, who declined to give his name.

The Dalai Lama's visit, his third to Taiwan, comes at an awkward time for its China-friendly government as it seeks to strengthen ties with the ever more powerful economy on the mainland.

President Ma Ying-jeou and other elite members of the ruling party have all indicated that they have no plans to meet the Dalai Lama.

While this may ward off an even more vehement reaction from Beijing, reports have emerged of low-key Chinese sanctions over the visit.

A Chinese banking delegation, led by deputy central bank governor Su Ning, was to have arrived here Monday to attend a seminar sponsored by the private Taipei Foundation of Finance, but China abruptly postponed the visit.

"We got a call from them saying they could not attend. They said they had to postpone the visit due to technical reason and would not provide details. But I think you and I know why," foundation chairman Sunny Chou told AFP.

Local media also reported that China would stay away from the Saturday opening of the Taipei Deaflympics, or the World Games for the Deaf.

"Beijing lashed out at Taiwan for allowing the visit, but it has done so in a calibrated fashion to spare Ma, who remains crucial to the Chinese leadership's unification designs," the Taipei Times said in an editorial.