Japan PM's bloc suffers crushing defeat at polls

TOKYO, July 29 (Reuters) Japanese Prime Minister Shinzo Abe's conservative ruling camp today suffered a devastating defeat in upper house elections a result that could well force him from office and paralyse policy-making.

Voters hammered Abe's coalition after a string of government scandals and gaffes and the bungling of pension records but he had decided to stay in his post, Japanese media reported.

''I would like to steadily proceed with education reform and revising the constitution,'' public broadcaster NHK quoted him as saying.

Abe's coalition had lost its majority in the upper house, NHK said, in its first nationwide electoral test since he took office ten months ago pledging to boost Japan's security profile and rewrite its pacifist constitution.

''If the outcome is in line with projections, it was a complete defeat,'' Hidenao Nakagawa, the LDP's secretary-general, told reporters. But he added that he wanted Abe to stay.

NHK said its exit polls showed that the LDP and its partner, New Komeito, winning between 39 and 55 seats - far short of the 64 needed to keep their majority in the upper house, where half of the 242 seats were up for grabs.

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 on track to become the biggest party in the chamber, laws will be hard to enact, threatening policy deadlock.

Critics say Abe, whose top priorities are revising the constitution and reforming education to nurture patriotism, 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.

PRESSURE TO GO Democratic Party leader Ichiro Ozawa - a pugnacious veteran who bolted from the LDP 14 years ago - had pledged to shrink income gaps and ensure the weak are not neglected.

Crushed by the charismatic Koizumi's LDP in a lower house election just two years ago, the Democratic Party welcomed the shift in its fortunes.

''This shows the high expectations that people have for us,'' Democratic Party executive Yukio Hatoyama said.

''They really didn't trust the Abe cabinet and they want us to get rid of this stalemate.'' Analysts said Abe still faced heavy 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.''' 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 his predecessor, Junichiro Koizumi.

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, small party members and conservatives in the Democratic Party, some of whom are seen ripe for poaching.

The Democrats are a mixed bag of former LDP lawmakers, ex-socialists and young conservatives.

Some analysts said a parliamentary deadlock could spark an early election for the lower house.

With a massive majority in the chamber, however, the ruling camp could well be wary of taking that risk, other analysts said.

No general election need be held until 2009.

REUTERS SM RN1922