Ishikawa and Hiroshi Sakaguchi, publisher and director at a literary museum in Fukuoka, discovered the unrecorded work while looking back through the paper's archives. It was verified as a genuine article by the Kawabata Foundation, he said.
The Kawabata Foundation is a body dedicated to preserving the late author's work, and annually awards a prize named after him.
"Utsukushii!" is the story of an industrialist who buries a young girl in his disabled son's grave after she suffers an accident while visiting the tomb.
On the common gravestone, the father inscribes: "A beautiful young boy and beautiful young girl sleep together".
Loneliness and empathy for the weak are strong themes in the story, which was first published when Kawabata was 27, immediately after the release of "The Dancing Girl of Izu," Ishikawa said.
"It was during the period when many prominent authors sought outlets for their literary products in local papers after major Japanese publishers and newspapers based in Tokyo suffered devastating damage from the Great Kanto Earthquake in 1923," he said.
"The story also has a lot in common with his other story that was published in 1954 under the title "Utsukushiki Haka" (Beautiful Grave)," he added.
Loneliness is a common theme in other stories by Kawabata, whose parents died early in his life, and whose sole carer -- his grandfather -- passed away when he was just 15.
In the rediscovered story, "you can see the 'sprouting' of the worldview that is evident in Kawabata's later works," Ishikawa said.
Kawabata's works in his later years include "Snow Country", "The Sound of the Mountain" and "The Old Capital" and have been translated into English.
Kawabata was awarded the Nobel Prize in literature in 1968, the first Japanese to be recognised in the field by the committee.
He committed suicide in 1972, at the age of 72.
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