Japan PM to keep key ministers in Friday rejig

TOKYO Thu Sep 16, 2010 9:48am EDT

Japan's Prime Minister Naoto Kan leaves a news conference after winning the Democratic Party of Japan party leadership vote in Tokyo September 14, 2010. REUTERS/Kim Kyung-Hoon

Japan's Prime Minister Naoto Kan leaves a news conference after winning the Democratic Party of Japan party leadership vote in Tokyo September 14, 2010.

Credit: Reuters/Kim Kyung-Hoon

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TOKYO (Reuters) - Japanese Prime Minister Naoto Kan, fresh from victory in a ruling party leadership race, is set to keep his finance minister in a cabinet shakeup scheduled for Friday, as public opinion polls showed a jump in support for his government.

But Foreign Minister Katsuya Okada will take up a key post as the ruling Democratic Party of Japan's (DPJ) secretary-general, just as Tokyo is in the midst of a territorial spat with Beijing that is straining ties between the two Asian giants.

"I asked him to assume the post knowing I can depend on him for taking care of party affairs in this difficult time," Kan told reporters on Thursday.

Japan intervened in global currency markets for the first time in six years on Wednesday after the yen hit a 15-year high against the dollar. The move came just a day after Kan survived a challenge from scandal-tainted powerbroker Ichiro Ozawa in a party leadership vote.

Kan, struggling with a fragile economic recovery and huge public debt, repeated on Thursday that he would take decisive steps on the yen's rise when needed.

Kan has offered Ozawa and Azuma Koshiishi, a senior Democratic Party lawmaker close to Ozawa, party posts as representatives of the DPJ chief, Jiji news agency said, in a symbolic move aimed for party unity.

The report follows Kan's comment that he aims to reshuffle the cabinet on Friday, and plans to ask Ozawa for help, without elaborating.

Japanese newspaper reports said Kan was likely to keep Finance Minister Yoshihiko Noda and Chief Cabinet Secretary Yoshito Sengoku in their posts in the cabinet reshuffle, after he decides party executive positions.

Support for Kan's government jumped in opinion polls after the party vote, reaching highs seen when he first took office in June. In a survey by the Asahi newspaper, 57 percent said they support Kan's government, up 8 points. A Nikkei business daily survey put the support rate at 71 percent, up 17 points.

Fewer than one in three voters, however, were optimistic about developments on the political front, where Kan faces both strife in his own party and a divided parliament. The Democratic Party-led coalition lost its majority in a July upper house election, and opposition parties can block bills in the chamber.

Only 28 percent of respondents to the Asahi poll said progress would be smooth on the political front, while 38 percent did not expect smooth progress.

Kan, who must balance the need to unify his fractious party with demands from backers who want to sideline Ozawa, tapped Okada, a policy maven with a Mr. Clean image, for the party's No.2 post of secretary-general.

"I consider this as my fate and will do my utmost to fulfill the duty," Okada told reporters.

The move will likely help Kan avoid appearing to have bowed to demands from Ozawa's camp, but would mean appointing a new top diplomat at a time of tensions with China and potential friction with ally Washington over a U.S. military base in southern Japan.

The Sino-Japanese spat began last week when Japan arrested the captain of a Chinese fishing boat after it collided with Japan Coast Guard ships near small East China Sea islands claimed by both sides. Beijing has demanded Japan free the captain.

(Reporting by Yoko Kubota, Kiyoshi Takenaka, Editing by Linda Sieg and Michael Watson)

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