UPDATE 8-Japan PM seeks Aug 30 poll despite grim prospects

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* Japan PM, behind in opinion polls, plans Aug. 30 election

* Lower house of parliament seen dissolved next week

* Tokyo poll portends ruling bloc defeat in national poll

* Calls to dump Aso before vote still heard

By Chisa Fujioka and Yoko Kubota

TOKYO, July 13 (Reuters) - Japanese Prime Minister Taro Aso said on Monday he plans to call a general election on Aug. 30, despite the prospect that his long-ruling conservative party is headed for a historic defeat.

A Democratic Party victory in the national election would end half a century of nearly unbroken rule by the business-friendly Liberal Democratic Party and raise the chance of resolving political deadlocks as Japan tries to recover from its worst recession since World War Two. [ID:nT220094]

The decision to call the vote, which must be held by October anyway, follows a crushing loss for the unpopular Aso's ruling party in a Tokyo election on Sunday that was seen as a barometer for the national poll.

"One never knows until an election what will happen," Aso told reporters. "This time is no exception. We must fight even in a difficult situation."

Parliament's lower house would be dissolved next week to set the stage for the election, Hiroyuki Hosoda, secretary-general of Aso's LDP, told reporters.

Moves within the LDP to replace Aso had been expected to grow after the party and its junior partner lost their majority in the Tokyo assembly, and some Aso critics refused to give up.

"Before the election we should chose a new 'pitcher', properly announce policies and then seek the people's mandate," former LDP secretary-general Tsutomu Takebe told a TV show.

But Japan has had four LDP leaders in four years, and a survey by NHK public TV said nearly 80 percent of voters were negative towards another change.

Tokyo's Nikkei share average slid 2.6 percent to its lowest close in eight weeks, hurt by the growing political uncertainty. [ID:nT363579]

Some financial market experts were disappointed the election would not be held sooner. [ID:nT360946] "The market has started factoring in a change of government, but the longer the wait, the more the political and economic uncertainty grows," said Susumu Kato, chief economist at Calyon Capital Markets Japan.