Japan PM puts off election - report

Japanese Prime Minister Taro Aso has decided to put off calling a snap election in order to deal with the global financial crisis and Japan's economic woes, the Kyodo news agency has reported. 

A decision to delay an election for parliament's lower house could prompt the opposition, which controls the upper chamber, to drag out debate on key bills, including a bank rescue plan, even as Japan faces financial turmoil that on Tuesday took Tokyo's Nikkei share average to a 26-year intra-day low.

The Kyodo report, which quoted sources close to the premier, was the second in two days to say Aso would put off elections.

Aso on Monday had denied a Nikkei business daily report that he had told an aide there would be no election for a while.

The Japanese leader, however, has repeatedly said he wants to prioritise policy-making, given deepening unease over the economy. Kyodo said late on Monday that Aso would make his decision on an election public on Thursday, when the government is expected to unveil an emergency economic package.

No election need be held until next year, but when Aso came to office in September he was widely expected to call an early poll to try to gain a mandate to break a stalemate caused by the divided parliament.

Aso's two predecessors quit within a year, worn out from battling the opposition and undercut by sagging public support.

The main opposition Democratic Party, previously eager to clear the legislative decks so Aso could call an early election, had shown willingness to act swiftly on key bills, but on Monday it signalled it was considering changing gears.

Pending legislation includes a law to extend Japan's naval mission in support of US-led military operations in Afghanistan, and a bank bailout scheme to allow the government to inject funds into banks, mainly regional institutions.

But the Democrats would risk voters' ire if they appeared to be putting political manoeuvring ahead of the public good at a time when the economy is slipping into recession and being hit by a yen surge that is battering exporter profits, analysts said

"It's a delicate situation to be in. If it's to do with the current economic crisis, they'd better not appear obstructionist," said Koichi Nakano, a political science professor at Sophia University. "They might be able to do it on the refuelling bill."

Aso also has a tough challenge given the limits to what one country can do on its own to cope with a global crisis.

"It's beyond the power of the Japanese government to do anything meaningful except exert leadership in international co-ordination, but I don't think Aso or any other Japanese leader has that ability," Nakano said.

Voters tend to support the view that an immediate election is not desirable, a poll published in the Asahi newspaper showed.

About 57 per cent of respondents to the poll carried out on October 25 and 26 said there was no need to rush to hold an election, compared with 33 per cent who wanted one soon.

On Monday, Japan's biggest bank, Mitsubishi UFJ Financial Group, said it would raise up to $US10.6 billion ($NZ19.8 billion) to replenish a depleted capital base while the government moved to beef up a bailout package for the country's ailing banks, which are big investors in domestic equities.

- Reuters