August 21, 2009 / 12:16 AM / 10 years ago

Japan opposition headed for decisive victory: reports

TOKYO (Reuters) - Japan’s opposition Democratic Party may score a runaway victory in the August 30 general election, seizing power from Prime Minister Taro Aso’s conservative party which has ruled for most of the past 54 years, newspapers said on Friday.

Posters of leader of Japan's main opposition Democratic Party Yukio Hatoyama are displayed at the party's candidate office for the upcoming election in Tokyo August 20, 2009. REUTERS/Toru Hanai

The Democrats could win more than 300 of the 480 seats in parliament’s lower house, although the number could change because about 20 percent of voters had not yet decided how they would vote, the Yomiuri and Nikkei newspapers said based on telephone surveys.

Aso’s Liberal Democratic Party (LDP), struggling with voter frustrations over scandals and long-term uncertainties about the economy and social security, is likely to see its strength more than halved to below 150 seats, the Nikkei said.

A solid victory for the opposition Democrats would end a policy deadlock in parliament, where the party and its allies already control the less powerful upper chamber and can delay legislation.

“The best thing for the market would be a very clear result, with the Democrats winning strongly,” said Kenichi Hirano, operating officer at Tachibana Securities.

“If it turns into a messy situation where they don’t get a majority and have to rely on other parties for a coalition, it won’t be that good for the market.”

Some said, however, that a landslide win for the Democrats could be negative for financial markets.

“They (the Democrats) want everything to be equal for everybody. This is not something a capitalist market can like,” said Masayoshi Okamoto, head of dealing at Jujiya Securities.

“They say they’re trying to be realistic but if they win that many seats they’ll basically have a free hand with policies.”

The Democrats have pledged to revive the economy by putting more money in the hands of consumers, holding off on raising the 5 percent sales tax for the next four years and scrapping highway tolls.

But critics say the party is unclear on how it will fund the steps and say the ambitious spending plans could lead to bigger government bond issuance and higher long-term interest rates.

Aso has called the Democrats inexperienced, weak on security policy and irresponsible on financial issues, although voter polls have continued to show the LDP well behind the opposition.

The LDP’s junior coalition partner, New Komeito, may also fail to help the party in the final election count, with some newspapers saying the small, Buddhist group-backed party faces a tough fight.

The LDP has ruled for all but 10 months since its founding in 1955, but is struggling with new challenges such as how to finance mounting social security costs to care for a fast-aging population.

Analysts predict that a slew of veteran LDP lawmakers, including former prime ministers, could lose their seats to younger Democratic candidates with a fresher image and promises for change.

Reporting by Chisa Fujioka and Elaine Lies; Editing by Joseph Radford

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