Majority of Japan voters back PM in party race: poll

TOKYO (Reuters) - Nearly 70 percent of Japanese voters want Prime Minister Naoto Kan to win the party leadership against powerbroker Ichiro Ozawa, a survey showed on Saturday, a race that could create a policy vacuum and push the yen higher.

Ozawa, 68, a critic of Kan's efforts to rein in Japan's huge public debt, is challenging Kan in a September 14 Democratic Party of Japan (DPJ) leadership vote as the country struggles with a surging currency and fragile recovery.

The winner will likely be prime minister by virtue of the Democrats' majority in parliament's powerful lower house.

Ozawa sharply criticized Kan for floating a possible rise in Japan's 5 percent sales tax ahead of a July upper house election. Defeat in the poll cost the ruling bloc its majority in the chamber, forcing the DPJ to seek opposition help to pass bills.

Admirers have credited veteran lawmaker Ozawa with engineering the huge election win that swept the DPJ to power for the first time last year, but many voters are put off by his image as a scandal-tainted wheeler-dealer.

Many are also reluctant to see another change at the top. Kan, who took office in June after his predecessor suddenly quit, is Japan's fifth prime minister in three years.

Only 15.6 percent of respondents backed Ozawa, who stepped down as party leader last year and as the DPJ's No. 2 this year over political funding scandals, and faces possible indictment if a judicial panel of ordinary citizens rules he must be charged.

The poll by Kyodo News agency also showed support for Kan's government had risen by more than 9 percentage points from a survey earlier this month to 48.1 percent.

Ozawa heads the biggest Democratic Party group, but besides DPJ parliamentarians, local lawmakers and party supporters can take part in the party leadership vote, so public opinion is likely to affect the outcome -- at present difficult to predict.

Ozawa, a wily strategist known for making political waves, has been visiting key party support groups in the hope of winning their members' backing.

The party battle is clouding the policy outlook as Tokyo scrambles to craft a package of steps to prop up a fragile, export-led economy after the yen hit a 15-year high against the dollar this week. The government is also keeping up pressure on the Bank of Japan (BOJ) to do more to fight deflation.

Kan vowed on Friday to take decisive measures when necessary to curb the yen's rise, signaling a possibility of currency intervention. And the BOJ is examining holding an emergency meeting early next week to ease monetary policy, a source familiar with the matter said.

(Editing by Nick Macfie)