INSTANT VIEW: Japan's opposition heading for election landslide

TOKYO (Reuters) - Japan's opposition was headed for a historic victory in an election on Sunday, exit polls showed, a win that would oust the long-ruling conservative party and give the untested Democrats the job of reviving a weak economy.

An exit poll by broadcaster TV Asahi showed the Democratic Party of Japan was on track for a landslide win with around 315 seats in parliament's powerful 480-member lower house.

That projection was in line with exit polls from other media and matched expectations in opinion polls during the campaign.

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KEY POINTS:

-- The Democratic Party (DPJ), as winners of Japan's election on Sunday, will face a raft of challenges including ballooning social welfare costs in a fast-aging society and tattered public finances.

COMMENTARY:

SATORU OGASAWARA, ECONOMIST, CREDIT SUISSE, TOKYO

"This result is in line with expectations. I don't think it will have any impact on the economy in the near term. Any impact will come next year when the Democrats' policies toward compensation for the household sector, children, raising the minimum wage will contribute to an increase in personal spending.

"The biggest challenge for the DPJ will be the Upper House elections next year. Even though the Democrats will have a Lower House majority, they do not hold a majority in the Upper House. If they want to push their policies on cutting waste and government spending, liberalizing agricultural policy, the key will be to win the Upper House election next year.

"The markets have largely discounted the results of this election so it won't have a big impact. Even though the economy has bottomed out, the GDP gap remains large and I think the BOJ will maintain its easy monetary policy. There could be some upward pressure on the yen in the short term, not so much because of the election but because of downward pressure on the dollar. In the medium term it could be a different story."

HIDENORI SUEZAWA, CHIEF STRATEGIST, DAIWA SECURITIES SMBC,

TOKYO

"This is a historic day in Japanese politics. The Democratic Party will form a coalition government but, given its huge victory, it will enjoy a strong leadership in carrying out policies it has outlined in its manifesto. That would be positive for Japanese stocks.

"Democrat decision-making will be made by top party leadership. In that sense, it will matter less who becomes finance minister than in an LDP government."

NORIHIRO TSURUTA, CHIEF STRATEGIST, SHINKO RESEARCH