* Opposition LDP expected to return to power
* Focus on nuclear power, economy and China
* Coalition jockeying likely after election (Adds comment from Osaka Mayor Hashimoto, voter)
By Kiyoshi Takenaka
FUKUSHIMA, Japan, Dec 4 (Reuters) - Candidates hit the streets on Tuesday at the official start of a campaign for a parliamentary election that is expected to return the opposition Liberal Democrats to power but risks furthering the policy stalemate plaguing the world's third-biggest economy.
In a sign that last year's nuclear crisis still weighs on Japan's national psyche, both former Prime Minister Shinzo Abe, the opposition Liberal Democratic Party (LDP) leader, and Prime Minister Yoshihiko Noda kicked off the campaign in the northeastern prefecture of Fukushima, site of the world's worst radiation disaster in a quarter century.
The role of nuclear power is one hot topic in the first national poll since the March 2011 earthquake and tsunami devastated Tokyo Electric Power Co's Fukushima Daiichi plant, causing meltdowns, forcing 160,000 people to flee and destroying a myth that atomic power is safe, cheap and clean.
Voters are also focused on how rival parties plan to rescue Japan's economy from what looks like its fourth recession since 2000 and cope with a rising China, ties with which have been chilled by a territorial feud that is feeding nationalist sentiment in both countries.
"Our mission is to protect the safety of our children and the public, to protect our territory and beautiful waters," Abe told a crowd in a city square in Fukushima City under cloudy skies. "We are determined to win a majority with (LDP ally) the New Komeito party and take back power.
"We just cannot afford to lose," he said to applause, though one listener carried a placard targetting the LDP's decades-long promotion of nuclear power saying, "It is the LDP that built nuclear plants in Fukushima".
Media opinion polls suggest that of the 12 parties running some 1,500 candidates, the LDP will win the biggest number of seats in parliament's powerful lower house.
That would give Abe, who quit suddenly in 2007 after a troubled year in office, the best shot at forming the next government, probably with long-term ally, the New Komeito.
But surveys published on Monday also show that the LDP's lead over Noda's Democratic Party of Japan (DPJ) has narrowed, increasing the possibility that the main conservative opposition party will need a third partner to form a government.
If so, the LDP would be eyeing potential post-election allies. Options include the newly launched, right-leaning Japan Restoration Party founded by popular Osaka Mayor Toru Hashimoto in a bid to woo voters fed up with the two main established parties, or other small groups, or even a chastened DPJ.
"Our economic policy is simple," Hashimoto told a crowd in Osaka, western Japan. "We will destroy the vested interests who until now have skimmed off all the cream."
Abe insists he will give no ground in a row with China over rival claims to tiny, uninhabited isles in the South China Sea and wants to spend more on defence and loosen the limits of Japan's pacifist constitution on the military.
He wants to pressure the Bank of Japan to ease its already hyper-loose monetary policy and to gear up public works spending to rescue the economy, steps Noda has criticised as irresponsible given Japan's mammoth public debt, already the worst among advanced nations at twice the size of the economy.
The pro-nuclear LDP says it will gradually restart off-line reactors judged safe, while thinking about Japan's best energy mix over the next decade. The Democrats aim to exit atomic power by the 2030s, although some sceptics doubt their commitment.
How any of the parties would secure lasting growth while reining in a ballooning social security bill in Japan's fast-ageing society remains unclear.
The Democrats surged to power for the first time in 2009, promising to put politicians, not bureaucrats, in charge of governing and to pay more heed to the interests of consumers than corporations in designing policies. Critics say the fractious party honoured its pledges mostly in the breach.
"This election is about whether we will move forward with what we must do, or turn back the clock to the politics of the past," Noda told a crowd in Iwaki, also in Fukushima prefecture.
Noda, the party's third premier in three years, enacted - with opposition help - a sales tax rise to curb public debt. But that step sparked a stream of defections from the party.
Many voters have yet to decide how to vote.
"The LDP looks set to assume power. But I don't think things will change drastically under LDP rule," said a 62-year-old public servant after listening to Abe's speech.
"If you live in Fukushima, you would want quicker reconstruction and decontamination rather than constitutional amendments and military buildup." (Additional reporting by Yoshiyuki Osada in Osaka; Writing by Linda Sieg in Tokyo; Editing by Ken Wills)
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