Narrowing LDP lead points to Japan post-election confusion

Japan's Liberal Democratic Party leader Shinzo Abe speaks during a debate for the upcoming general election in Tokyo November 30, 2012.

TOKYO (Reuters) - Japan's opposition Liberal Democratic Party's lead has shrunk in the polls ahead of a December 16 election, suggesting the conservative party and its partner may need help to make up a majority and threatening more policy confusion for the world's third-biggest economy.

Former Prime Minister Shinzo Abe's LDP is expected to win the biggest number of seats in parliament's powerful lower house, putting Abe in pole position to form the next government, most likely with long-term LDP ally, the smaller New Komeito.

But polls published on Monday showed a dwindling lead for the LDP over Prime Minister Yoshihiko Noda's Democratic Party of Japan (DPJ), which has seen its support sag since sweeping to power for the first time three years ago promising change.

"As of yesterday, I thought that the LDP and New Komeito together would scrape by with a majority," said Katsuhiko Nakamura, executive director of think tank Asian Forum Japan.

"Now, I wonder."

A poll by the Asahi newspaper showed 20 percent of voters would cast their ballots for the LDP, down three percentage points from a November 26 survey. The DPJ ranked second with 15 percent, up two points, while the right-leaning Japan Restoration party was third with nine percent, unchanged from the previous poll.

"This is going to be a tough election. But I see a trend emerging where (support for) the LDP is slipping a little and the DPJ is gaining somewhat," Noda told reporters in Monday.

"In the election campaign that will be starting tomorrow, I'm determined to do my utmost and fight to the bitter end ... so that the Democratic Party can stay in power."

Few see the Democrats reversing the trend to win the vote.

But pundits said Abe's heavy emphasis on pressuring the Bank of Japan (BOJ) to ease its already hyper-loose monetary policy to rescue the economy from recession might be too specialized for many voters concerned about their pensions and jobs.

And Abe's hawkish stance on security matters, including tough talk over a territorial row with China, compared to Noda's more measured remarks may also be behind the apparent decline in support, analysts said.

"The moment of knee-jerk Abe support possibly peaked shortly after his election as LDP president (in September) when he was the man of the hour," said Jepser Koll, head of equity research at JP Morgan in Tokyo. "Now we're down to the nitty gritty ... and while Abe may have a predilection to be ideological, the Japanese people have a deeply pragmatic strain.

Whoever comes out on top in the election will anyway need to forge some form of alliance since no party has a majority in parliament's upper house, which can block legislation. An election for half the upper house seats is set for July.

Options include some form of link with a smaller, defeated DPJ or defectors who might leave after the election, the Japan Restoration Party, or some combination of other smaller parties.

"We'll have gridlock until July and then a fiercely fought election," Koll said.

Japan's independent voters have switched allegiances drastically in recent elections. The LDP won a landslide victory in 2005 under then-Prime Minister Junichiro Koizumi, who pledged bold reforms but suffered a massive defeat four years later.

With voters disillusioned and choices fragmented by a spate of small new parties, that sort of huge swing seems unlikely.

"I see no reason to think that independents will swing in any one direction," said Chuo University professor Steven Reed. "In 2005, they all went to the LDP and in 2009 they all went to the DPJ. This time they will be all over the place."

(Additional reporting by Kiyoshi Takenaka; Editing by Nick Macfie)