UPDATE 3-Japan opposition LDP set to win solid election majority-polls

Thu Dec 6, 2012 12:44pm IST

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* LDP set to govern with own majority-polls

* LDP chief Abe in line to return as PM

* Abe favours easy money policy, tough stance toward China (Adds comment by Abe adviser)

By Tetsushi Kajimoto and Linda Sieg

TOKYO, Dec 6 (Reuters) - Japan's conservative Liberal Democratic Party (LDP) looks on course to win a surprisingly solid majority in a Dec. 16 parliamentary election, media polls showed on Thursday, returning to power with a hawkish former premier at the helm.

Former Prime Minister Shinzo Abe, who heads the LDP and would likely return to the top job if the party wins, is calling for radical monetary easing by the Bank of Japan (BOJ) to beat persistent deflation and a strong yen.

He has also promised to stand tough against China over disputed isles in the East China Sea, loosen limits in Japan's 65-year-old pacifist constitution on the military, and rewrite what conservatives see as overly apologetic accounts of Japan's wartime past.

Previous opinion polls suggested the LDP would come first in the election for the lower house but might have to rely on its smaller ally, the New Komeito party, to take a majority.

The LDP is now predicted to win 257 to 306 seats in the 480-seat lower house, surveys by major newspapers including the Asahi, the Nikkei business daily and Kyodo news agency showed, although it is not likely to ditch the New Komeito as a partner.

Even if the LDP, with or without the New Komeito, has a majority in the lower house, it will not have one in the upper chamber, which can block legislation.

However, a recent legal change prevents the opposition from taking the budget hostage by refusing to pass a funding bill, as happened in recent years, so the LDP will find it easier to implement spending plans. And it can put pressure on the BOJ without enacting legislation.

But revising the pacifist constitution, however, would require a two-thirds majority in both houses as well as a public referendum.

The opinion polls also showed the ruling Democratic Party of Japan (DPJ) could lose half or more of the seats it held in the lower house. However, surveys of some 100,000 voters also showed up to 40 percent were undecided how to vote.

"The polls suggest that the election is going to be the mirror image of the one held three and a half years ago. In that election, the voters decided to get rid of the LDP so they voted for the DPJ even though they did not have particularly high expectations," said Columbia University professor Gerry Curtis.

"Now they are poised to throw out the DPJ, which means a big victory for the LDP even though there is little enthusiasm among the voters either for the LDP or for its leader, Mr. Abe."

The newly launched, right-leaning Japan Restoration Party founded by popular Osaka Mayor Toru Hashimoto, is likely to win around 50 seats, the polls showed.

The party has been seen as a potential ally of the LDP if, as many pundits had predicted, the LDP and New Komeito together fell short of a majority.

EASY MONEY, NUCLEAR POWER

Monetary policy is a major issue in the election as politicians prescribe ways to end deflation and keep the world's third largest economy from sliding deeper into a recession.

Abe, who quit abruptly in 2007 after a troubled year in office, wants the central bank to ease already hyper-loose monetary policy and public works spending to help rescue the economy - a stance Prime Minister Yoshihiko Noda has criticised as irresponsible given Japan's huge public debt, already the worst among advance nations at twice the size of the economy.

"Make no mistake, a fundamental change in (central bank) policymaking is coming to Japan," said Jesper Koll, head of equities research at JP Morgan in Tokyo.

Shizuoka University Professor Etsuro Honda, an adviser to Abe, told Reuters on Thursday that the LDP could submit to parliament by July a bill to give the BOJ a binding price target and a mandate to maxmimise employment.

He added that it was also important to make sure that the successor to BOJ Governor Masaaki Shirakawa, whose term ends in April, is on board with the government stance.

"Revising the law takes time, so first we have to have a good BOJ governor," Honda said.

Voters are also focused on the role of nuclear power, which accounted for nearly 30 percent of Japan's electricity before last year's Fukushima disaster. The LDP, which promoted atomic energy during its long rule, says it will decide on the best energy mix within 10 years. Critics say that would be tantamount to business as usual on energy policy.

The DPJ swept 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 failed to honoured its pledges.

Noda, the DPJ's third premier in as many years, splintered his party in August by enacting, with opposition help, an unpopular sales tax rise to curb public debt. (Additional reporting by Stanley White; Editing by Michael Perry and Jonathan Thatcher)

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