HIGHLIGHTS-Japan opposition's Okada speaks at Reuters event

(For more stories on Japan's Aug 30 election click [ID:nPOLJP])
(See also TAKE A LOOK [ID:nOKADAJP]

TOKYO, Aug 10 (Reuters) - It is not desirable for Japan to
intervene in currency markets when currency rates are in line
with economic fundamentals, Katsuya Okada, the No.2 in Japan's
main opposition Democratic Party, said on Monday. [ID:nT4896]

Polls show the Democrats have their best ever chance of
ousting the long-ruling Liberal Democratic Party (LDP) in an Aug.
30 election, ending more than five decades of almost unbroken
rule by the LDP and raising the chances of breaking a stalemate
in a divided parliament.

Below are key quotes from Okada at a Thomson Reuters
Newsmaker event:

ON FOREIGN EXCHANGE

"What to do with currencies should be left to a new
government. But I think trying to move currency rates
artificially when they are in line with economic fundamentals
would be undesirable in the long run."

ON THE ECONOMY

"If we do not change the model of relying on exports,
there will be no future for Japan's economy.

"I think it is too optimistic a view to say that the economy
is recovering. Last year, the economy was just far too bad ...
and we have just come back somewhat.

"I don't think we can yet say we are at a sustained growth
basis.

"Growth that relies on exports to the United States, in
particular, clearly has its limits as the U.S. overconsumption is
being corrected.

"For domestic demand-led growth, consumption has to be at the
centre."

Asked if the Democrats might consider additional economic
stimulus measures if the economy suffered a double-dip:

"I will not rule out fresh economic measures. Depending on
the situation, I think there could be a need for that.

"I think one possible option may be to bring forward various
policies we are thinking of conducting starting next fiscal year.

"Regarding sources of financing, there is a lot within the
recent extra budget of 14 trillion yen ($143.8 billion) that has
not started. There is also a lot that seems, to our eyes, to be
wasteful. One possible idea is to freeze such things and to use
those funds in the future."

ON FISCAL TARGETS

"I do think that if the economy stabilises to a certain
level, then we want to set a new target by the time we form a
budget for the next fiscal year, but there are many uncertain
factors as to whether the economy will recover to such a stable
situation by this December."

ON CORPORATE TAX

Asked if the Democrats were considering tax cuts for large
firms rather than just for small and medium-sized companies:

"In the previous election, Keidanren (Japan's biggest
business lobby) stood at the forefront and supported the LDP, and
they made a very harsh assessment of our policy. That is because
of differing perspectives, and I do not think that can be helped.

"We do not particularly want Keidanren to support us. We will
firmly stress our policies to the voters.

"Of course, if there are particular companies that want to
support us, we would like to welcome that. But we will not bend
our policies for that purpose.

"We are not thinking of reducing any corporate taxes other
than for SMEs."

ON ASIA

"Going forward, Asia is expected to become more prosperous.
The domestic demand of Asia as a region is extremely important.
As Asia grows, Japan can be a part of that."

ON U.S.-JAPAN RELATIONS

"What is important is for President Obama and Prime Minister
Hatoyama, if there is a government change, to first build a
relationship with firm trust. There are various issues of concern
between Japan and United States. It is necessary to coordinate
what issues are the priorities that need to be solved and to work
on changing systems based on the trust.

"During the Bush Administration, when things were very
negative about nuclear disarmament, the LDP had said that was
fine. Then when the Obama Administration came to power ... it
said the Obama Administration's nuclear policies are great,
'Let's work together'. No one will trust them if they are like
that. That's what I mean by Japan lacks independence.

"Unless Japan has its own nuclear strategy, nuclear
disarmament, and nuclear non-proliferation policies and it
strikes a balance with the United States, and if Japan thinks
there is no mistake if it just follows what the United States
says, then I think as a sovereign nation that is very pathetic."

ON CHINA

"What's important is that it (China) improves transparency.

"Our economic interdependency is growing, so there is no
option for us to be in a military conflict. If that is so then we
should not be in an arms race, but rather aiming to reduce arms
in the future."

ON RESOURCES

"It is not a choice of one or the other (food
self-sufficiency or pursuing free trade).

"Other developed countries such as the EU (European Union)
have achieved a self-sufficiency rate of 60-70 percent, but that
doesn't mean they don't have free trade."

ON THE CLIMATE

"It's negative to think that climate change (policies) will
hinder economic growth. Rather, this is an opportunity, like a
green New Deal. The companies that see buds of new growth in this
and take up the challenge will be the ones that will grow going
forward."

ON OPPORTUNITIES FOR WOMEN

"In the current Japan company system, highly competent women
don't find many opportunities, so they go outside of Japan, or go
to foreign firms ... What we need to do is to open the doors and
let in new winds."

ON NORTH KOREA

"We are at a critical moment to see whether North Korea will
have nuclear weapons and we should prevent that from becoming a
fact. For that purpose, we should not hesitate to apply pressure.
But the purpose of applying pressure is to bring them back to the
negotiating table to solve the nuclear, missile and abductee
issues.

"We are not hoping to change the current regime by applying
pressure. What we are hoping for is to apply pressure so that the
DPRK (Democratic People's Republic of Korea) will come to the
table for dialogue."

ON KEEPING PUBLIC SUPPORT UNTIL UPPER HOUSE ELECTION

"We have an upper house election next summer and the public
won't support us unless they can feel things have actually
changed. We will make sure to implement measures promised in our
manifesto and in addition, we will seek a new relationship
between politics and the bureaucracy. Those things will be
important for our first 300 days until the upper house election."
(Reporting by David Dolan, Masayuki Kitano, Yoko Kubota and Yoko
Nishikawa; Editing by Joseph Radford and Michael Watson)