Japan's Fukuda leads PM race

TOKYO (Reuters) - The race to succeed Japanese Prime Minister Shinzo Abe shaped up on Friday as a fight between 71-year-old lawmaker Yasuo Fukuda, an advocate of warm ties with Asian neighbors, and hawkish former foreign minister Taro Aso.

Fukuda emerged as the frontrunner after several ruling Liberal Democratic Party (LDP) factions threw their support behind him, but the outspoken Aso vowed to fight to the end.

Japanese media said Abe's charismatic predecessor, Junichiro Koizumi, was backing Fukuda while a Kyodo news agency poll said voters favored Fukuda 28.1 percent to 18.7 percent for Aso.

Many analysts said the outcome of the LDP leadership race appeared a done deal, but some warned uncertainty remained ahead of the September 23 poll of party lawmakers and local chapters.

"I think the LDP is basically panicking and trying to find someone acceptable to everyone," said Koichi Nakano, a political science professor at Tokyo's Sophia University, referring to the sudden swell of support for Fukuda, an old-style politician who had declined to run against Abe last year, citing his age.

"But there is a world outside the LDP," Nakano said.

Abe's year in power was marred by scandals involving cabinet members and a humiliating election defeat in July that cost his ruling coalition its majority in parliament's upper house.

But his shock decision to step down stirred worries of delay in decisions on vital policies such as tax and fiscal reform.

In keeping with his traditional style, Fukuda, the son of a prime minister, sounded diffident as he declared his candidacy for president of the LDP, and hence premier, to his supporters.

"I never even dreamed I would find myself in such a position. It's something I hadn't considered at all," Fukuda said.

By late afternoon, he was sounding a bolder note.

"We need to tackle many problems, so I will work towards solving them with courage and strength," he told reporters.

ASO ATTACKS

Aso, who unlike Fukuda shares Abe's conservative agenda aimed at reviving traditional values and patriotism, quickly attacked the apparent backroom deals among party faction leaders.

"Is it really OK for the play to be over before the curtain even goes up?" he said at a news conference.

The victor of the LDP leadership race is assured of the premiership by virtue of the ruling camp's grip on parliament's lower house, which picks the prime minister.

Finance Minister Fukushiro Nukaga, 63, had been the first to say he would run in the party poll, but on Friday he withdrew and backed Fukuda, a former chief cabinet secretary.

Aso and Fukuda differ more on foreign policy than economics, with Fukuda favoring a less U.S.-centered stance and friendly ties with China over containment of Japan's giant rival.

Aso has referred to China as a "threat" in the past. But on Friday he stressed his role as foreign minister in improving ties with Beijing and Seoul, and analysts said chilly relations with Japan's neighbors were unlikely to return even if he won.

Whoever succeeds Abe faces a potential deadlock in a divided parliament, including a showdown over a Japanese naval mission in support of U.S.-led military operations in Afghanistan.

Enabling legislation for the mission expires on November 1 and opposition parties are against extending it.

SNAP ELECTION?

"This next (LDP) leader will be a sort of caretaker until the next general election," said Hidenori Suezawa, chief government bond strategist at Daiwa SMBC. "He won't put forth drastic policies, and they wouldn't pass anyway."

Aso, himself the grandson of a prime minister, is known as a fan of "manga" comic books and for his ability to work a crowd.

But his closeness to Abe and his record for gaffes have raised doubts about his suitability for the post.

Some analysts, however, questioned whether Fukuda could help the party avoid a bashing in the next lower house election.

"Abe lost the public's trust and damaged the prime minister's authority," said Yasunori Sone, a professor at Tokyo's Keio University.

"The question now is how to rebuild that, but it's questionable how well the LDP understands this."

No lower house election is required until 2009 but a deadlock in parliament could prompt one sooner.

Known for his short temper, Fukuda played a pivotal role as top government spokesman under Abe's predecessor, the maverick Koizumi, expanding his brief into diplomacy and security and earning the nickname "shadow foreign minister".

He resigned in 2004 after admitting he had skipped some payments into the public pension scheme, though some analysts attributed his abrupt departure to growing friction with Koizumi.

(Additional reporting by Isabel Reynolds, Chisa Fujioka, Yuzo Saeki and George Nishiyama)