Unpopular Japan PM taps veterans in cabinet shuffle

TOKYO, Aug 27 (Reuters) Japanese Prime Minister Shinzo Abe picked veteran lawmakers for key posts in a reshuffled cabinet today, but analysts questioned how much the changes would restore his popularity after last month's huge election defeat.

Abe's public support has plummeted since he took office a year ago with an ambitious conservative agenda, slashed by scandals and gaffes by previous cabinet members that contributed to an opposition victory in a July upper house poll.

Critics had charged that Abe's first cabinet was packed with close friends and allies who lacked necessary experience.

Abe selected former defence minister Fukushiro Nukaga, 63, as finance minister. A security expert and one-time contender to become premier, Nukaga has also been economics minister.

Nobutaka Machimura, a former foreign and education minister who shares Abe's goal of winning Japan a bigger say in global affairs, was appointed foreign minister. Machimura also heads the biggest faction in Abe's Liberal Democratic Party (LDP).

Former foreign minister Masahiko Komura, known for his ability to avoid creating waves, will become Japan's new defence minister. He replaces Yuriko Koike who last month became the country's first female defence chief.

Abe tapped Yoichi Masuzoe, 58, a former scholar who had outspokenly criticised Abe for refusing to step down after the election defeat, to be Minister for Health, Labour and Welfare.

Now an upper house lawmaker, Masuzoe must try to restore public faith in Japan's pensions system, creaking under the weight of a shrinking, ageing population.

Government mishandling of records of millions of premiums paid into the public pension system by voters -- already worried about how their rapidly ageing country will care for them in their old age -- was another big factor behind the election loss.

REASSURING THE REGIONS Some analysts said the new cabinet would dampen criticism of Abe inside the LDP and might entice back party supporters who had voted for the opposition in the upper house election.

But they said it sent no clear signal that Japan would forge ahead with market-friendly reforms and efforts to reduce Japan's huge public debt.

''The new cabinet may provide political stability but it could be received by the market that the reform in Japan is slowing,'' said Takahide Nagasaki, a senior currency strategist at Daiwa Securities.

Ahead of the cabinet reshuffle, outspoken Foreign Minister Taro Aso, a close ally and would-be prime minister who shares many of Abe's conservative policy goals, was chosen as LDP secretary general, the party's number two post.

The 66-year-old political veteran is well-known as a fan of ''manga'' comics, but has stirred controversy with verbal blunders.

''The important issue for the LDP is how to restore confidence in the party,'' Aso told a news conference after his appointment to the party post. ''What we must do is show how we will deal with the people's anxiety about the future.'' Aso called for steps to help rural regions, many of which have suffered from cuts in public works spending as the government tries to rein in debt.

''When reforms take place too quickly, vested interests are destroyed and there is pain,'' he said.

Abe appointed former trade minister Kaoru Yosano, 69, as chief cabinet secretary -- a vital role that includes liaising with coalition allies and acting as top government spokesman.

Abe's new cabinet will face a tough battle to get laws enacted, including a bill to extend a navy mission in support of US-led operations in Afghanistan, since opposition parties won control of parliament's upper house in a July 29 election.

Japan's first prime minister born after World War Two, Abe has been accused of focusing too much on his conservative agenda, including revising the pacifist constitution and forging a bigger global security role for Japan, while voters cared more about bread-and-butter issues such as pensions and health care.

REUTERS RAR HT1520