UPDATE 1-Japan bank min urges stimulus, markets shrug

(For more stories on the Japanese economy, click [ID:nECONJP])

* Kamei: Need new economic steps as stimulus petering out

* JGBs dip on recent data, analysts say selling likely over

* Markets do not expect large stimulus given huge public debt (Adds comments, more backgrounds)

TOKYO, March 19 (Reuters) - Japan's outspoken banking minister Shizuka Kamei called again on Friday for fresh stimulus to boost the economy, but analysts said big spending was unlikely given the government's need to limit debt issuance.

The government has just upgraded its economic assessment for the first time in eight months and is keen to contain any further rise in bond issues as the national debt is already roughly twice the size of the country's gross domestic product. [ID:nTKF106890]

Kamei, the leader of a tiny coalition party, has been calling for another large-scale stimulus package, but Prime Minister Yukio Hatoyama has said there are no such plans in the works.

The banking minister said on Friday that a key land price survey released the previous day showed that the country had not pulled out of deflation. [ID:nTKC005762]

"What we need is not just piecemeal policies. We need a policy that will galvanise the whole economy. Otherwise land prices will keep falling," he told a news conference.

Japanese government bonds largely brushed off his comments. Prices nudged lower on recent data suggesting the economy will keep improving gradually, but analysts said the selling may have mostly petered out. [JP/]

Hatoyama's Democratic Party of Japan (DPJ), while holding a massive majority in parliament's powerful lower house, lacks a majority in the upper chamber, which can stall legislation. That means he needs the backing of Kamei's party.

Both parties want to look proactive on the economy ahead of an upper house election expected in July, especially as public support for Hatoyama's government has been slipping steadily since he took office six months ago.

Kamei delayed government work on an extra budget for the current fiscal year ending this month with demands for more spending, but he ended up winning only a marginal increase in the size of the package.

He has also called for the Bank of Japan to directly buy government bonds to finance the government's deficit spending, but Finance Minister Naoto Kan has rejected such an idea.

Financial markets have tended to shrug off Kamei's comments as few investors think his ideas will be taken up by a government that is worried about being seen as lacking fiscal discipline.

"Extra stimulus measures are possible as there is an election this year, and that could put some upward pressure on yields," said Tetsu Aikawa, deputy general manager of capital markets at Shinsei Bank in Tokyo.

"But the reality is the government can't increase bond issuance, so any measures they take are likely to be small and have little economic impact. Yields will eventually move lower." (Reporting by Noriyuki Hirata and Stanley White; Writing by Hideyuki Sano; Editing by Hugh Lawson)