Japan PM suffers election drubbing but stays on

TOKYO, July 29 (Reuters) Japanese Prime Minister Shinzo Abe's conservative ruling camp suffered a devastating defeat in upper house elections today, but the 52-year-old conservative insisted he would stay in his post despite the drubbing.

''I am determined to carry out my promises although the situation is severe,'' Abe said, after acknowledging that he was responsible for the huge loss.

''We need to restore the people's trust in the country and the government,'' a weary and drawn-looking Abe told reporters.

Voters angry after a string of government scandals and gaffes and the bungling of pension records stripped Abe's coalition of its upper house majority in his first big electoral test since taking office 10 months ago.

Abe's coalition will not be ousted from government by a loss in the upper house, since it has a huge majority in the more powerful lower chamber, which elects the premier.

But, with the main opposition Democratic Party of Japan winning control of the upper house, laws will be hard to enact, threatening policy deadlock.

''We need to discuss issues closely with the Democratic Party in the upper house and listen to them when necessary,'' said Abe, after placing a few red rosettes marking the LDP's scarce victories on a results board at his party's headquarters.

With eight seats left to be decided, public broadcaster NHK said the LDP and its partner, New Komeito, had won 42 seats, lagging the Democrats on 59.

The coalition needed 64 to keep their majority in the upper house, where half of the 242 seats were up for grabs.

The LDP alone was certain to win fewer than 40 seats, media projections showed, worse than a loss in 1998 that forced Ryutaro Hashimoto to resign as prime minister.

OUT OF TOUCH? Critics say Abe, who pledged to boost Japan's security profile, rewrite its pacifist constitution and nurture patriotism in schools, was out of touch with voters.

''Prime Minister Abe has projects like revising the constitution, but the Democrats have been saying that people's everyday lives should come first. I think those policies should be prioritised,'' said Hirofumi Nemoto, 48, a newspaper seller in Chiba, who said he voted for the Democratic Party.

Democratic Party leader Ichiro Ozawa -- a pugnacious veteran who bolted from the LDP 14 years ago -- had pledged to shrink income gaps, protect the weak and help farmers -- a group that had long supported the LDP.

''Every national election is a credibility test for the government. They should understand that the answer was 'no','' Democratic Party executive Yukio Hatoyama said.

Ozawa, who suffers from heart problems, saw a doctor and was to rest for a day or two to recover from fatigue after his tough campaigning, a party official said.

It was a remarkable turnaround for the Democratic Party, which had been crushed by charismatic former LDP Prime Minister Junichiro Koizumi in a lower house election just two years ago.

Analysts noted that the LDP was short of viable successors, but added that Abe would still face pressure to resign.

''The people clearly gave Abe a thumbs-down. His credibility as a leader was completely rejected,'' said Hokkaido University professor Jiro Yamaguchi.

''The real crisis for the LDP is that there is nobody who would call for Abe's resignation and say, 'I'll do it.''' Some in Abe's party expressed dismay at his decision to stay.

''I can't understand Abe's comments that he will stay on. He doesn't understand common sense,'' LDP upper house lawmaker Yoichi Masuzoe was quoted by Kyodo news agency as saying.

Abe, Japan's first leader born after World War Two, won early praise for improving ties with Beijing and Seoul that had chilled during the five-year reign of Koizumi, his predecessor.

But doubts about his leadership were fanned by gaffes and scandals that led two cabinet members to resign and one to commit suicide, as well as revelations that the government had lost track of millions of pension premium payments.

A weakened ruling bloc is expected to try to bolster its hand by wooing independents and conservatives in the Democratic Party -- a mixed bag of former LDP lawmakers, ex-socialists and young conservatives, some of whom are seen as ripe for poaching.

Some analysts said a parliamentary deadlock could prompt an early lower houes election, but Abe said he had no such plans.

With a massive majority in the chamber, the ruling camp could well be wary of facing voters before it has to in 2009.

REUTERS JT BST2124