TOKYO (Reuters) - Finance Minister Naoto Kan, a fiscal conservative with an image as a challenger to the status quo, looked set to become Japan's next premier on Friday, media said, in a ruling party vote head of an election next month.
Kan, 63, would become Japan's fifth prime minister in three years, taking the helm as the country struggles to rein in a huge public debt, engineer growth in an ageing society, and manage ties with security ally Washington and a rising China.
The Democratic Party of Japan (DPJ) will vote later in the day to select a successor to unpopular Prime Minister Yukio Hatoyama, who quit abruptly this week to improve his party's chances in a July upper house poll that the ruling bloc needs to win to avoid policy deadlock.
Hatoyama, his voter ratings in tatters, resigned on Wednesday just eight months after the Democrats swept to power pledging to cut waste, wrest control of policy from bureaucrats, and give consumers more cash to stimulate domestic demand.
His abrupt departure has raised concerns among investors that the government will delay efforts to thrash out plans, due out this month, to cut a public debt that is already twice the size of Japan's GDP and to craft a strategy for sustainable growth.
Japanese media said Kan was likely to defeat Shinji Tarutoko, 50, a little known lawmaker who had won backing from some supporters of Democratic Party powerbroker Ichiro Ozawa.
Ozawa, seen as pulling the strings in Hatoyama's government, also quit his key post as party secretary-general this week in an effort to improve the party's image, tarnished by funding scandals that embroiled Ozawa, Hatoyama and other lawmakers.
Kan, a former health minister once known for battling bureaucrats, has forged an image as a fiscal conservative and occasional central bank critic since assuming the finance post in January.
If he becomes premier, that could spell bolder steps would be taken to rein in the huge public debt, although he would face opposition from many in his party ahead of the election.
The new party leader, to be voted in as premier by parliament later in the day, is assured the premiership by virtue of the Democrats' huge majority in parliament's powerful lower house.
He is expected to form a new cabinet later the same day.
The Democrats swept to power in a historic election last year and will run the government whatever the outcome of the July upper house poll, but the ruling bloc needs to win a majority in that chamber to ensure that legislation is enacted smoothly.
Media surveys showed Hatoyama's resignation had given the party a boost. In an Asahi newspaper poll, 28 percent of voters said they planned to cast their ballots for the Democrats against 20 percent for the opposition Liberal Democratic Party, ousted last year after more than 50 years of almost non-stop rule. That compared to 20 percent who favoured the DPJ in previous survey.
A Yomiuri newspaper poll also showed a similar boost in voter support for the Democrats in NEXT (NXT.LO)month's upper house election.
Kan, known for his short temper, became Japan's most popular politician for a time when he battled bureaucrats as health minister in 1996 to expose a scandal over HIV-tainted blood products.
(Reporting by Linda Sieg; Editing by Edwina Gibbs)
