Q+A: What happens after Japan election votes counted?

TOKYO (Reuters) - Japan's opposition Democratic Party looks headed for an election win on Sunday that would oust the conservative Liberal Democratic Party (LDP) for only the second time in its 54-year history, newspaper surveys show.

The prospect has caused uncertainty in financial markets about how quickly any new government will be formed after the votes are counted. The process took about three weeks in 1993, when the LDP lost an election for the powerful lower house and was briefly replaced by a multi-party coalition, but few expect it to take that long this time.

Below are some questions and answers about what is likely to happen, and when.

WILL PM CONCEDE DEFEAT AND RESIGN? AND IF SO, WHEN?

Japanese media will announce projections based on exit polls immediately after voting ends at 8 p.m. (1100 GMT) on August 30. Later in the evening they will issue further projections based on partial vote counts.

If the Democratic Party is assured of winning a majority in the 480-member lower house or comes close enough to take a majority with two small allies, Prime Minister Taro Aso may concede defeat on election night and state his intention to resign as LDP leader.

Democratic Party leader Yukio Hatoyama would also probably declare victory on election night. Aso would not formally resign as prime minister yet.

If the election outcome is unexpectedly indecisive, with neither camps winning a majority, the two sides would engage in a tug-of-war over members of other small parties and independents to try to form a coalition.

HOW SOON WILL PARLIAMENT VOTE ON A NEW PM?

A special session of parliament must be held within 30 days of the election to vote on a new prime minister.

The date of the session will be formally decided by incumbent premier Aso, who -- if his coalition has lost -- would then resign along with his cabinet before a vote by each chamber.

But the actual timing will be decided in discussions by senior lawmakers from each political party.

If the Democrats and their allies have a solid majority, parliament would likely be convened in the week of September 14. If the outcome is inconclusive, the session would be delayed.

HOW SOON WILL A NEW CABINET BE FORMED AFTER THE PM IS CHOSEN?

Hatoyama is expected to set up a transition team including those who will take key cabinet portfolios quickly, possibly the day after the election.

Some analysts say that if the Democratic Party wins big, Hatoyama can form his cabinet soon after being voted in by parliament as prime minister.

Others, however, suggest the new leader will take some extra time to make careful checks of potential ministers' background to avoid tapping anyone with a scandal lurking in the closet.

Hatoyama has said he wants to appoint members of parliament to the key posts of foreign and finance ministers and chief cabinet secretary, dampening but not killing speculation he might draft someone from the private sector for these portfolios.

WHAT ARE THE NEW GOVERNMENT'S FIRST PRIORITIES?

Japan's new leader will be keen to attend a series of international meetings starting with a U.N. climate change conference in New York on September 22, a U.N. General Assembly meeting and a G20 leaders summit in Pittsburgh on September 24-25.

Budgetary matters will also claim much of the new government's attention. Democratic Party leaders have said they might freeze or redirect some of the 14 trillion yen ($149.8 billion) in stimulus spending planned for the year to March 31, 2010.

They may have to craft an extra budget to cover an expected tax revenue shortfall, adding to worries about sky-high public debt.

And they will need to get started on drafting the annual budget for the year from next April 1. Drafts are usually finalized by late December.

(Editing by Dean Yates)