Japan opposition lead vanishes as chief faces woes

TOKYO (Reuters) - Japan's main opposition Democratic Party has lost its lead among voters ahead of a looming election, a poll showed on Friday, adding to pressure on its leader to quit over a scandal that has ensnared a close aide.

Surveys before the scandal broke had shown the Democrats ahead, fanning expectations they may end more than 50 years of almost unbroken rule by the conservative Liberal Democratic Party (LDP) and help break a political deadlock that has held back Japan's response to a deepening recession.

Party leader Ichiro Ozawa said on Tuesday that he would stay in his post after prosecutors charged a close aide with accepting illegal corporate donations.

But he left the door open to resigning if voter support slid and endangered his party's chances of defeating the ruling LDP in an election that must be held by October.

In a disturbing sign for the opposition, a poll by the mass circulation Yomiuri newspaper showed the Democrats running neck and neck with Prime Minister Taro Aso's LDP.

Thirty-one percent of voters said they would cast their ballots for the Democrats -- down three points from earlier this month -- while the same percentage planned to opt for the LDP -- up seven points.

SITUATION COULD WORSEN

Ozawa apologised on Friday to Democratic members of parliament and sought their understanding but one lawmaker worried that the party's situation could deteriorate.

"There is no need to react to each and every opinion poll," Keiichiro Asao, who holds the opposition defence portfolio, told reporters after an upper house gathering.

"If what the party has said so far is persuasive to the public, they opinion polls will probably change. But if it turns out that what we have been saying is different from the facts, then the situation could become even worse."

Ozawa has denied breaking the law and has criticised prosecutors for being unfair in charging his aide.

Other lawmakers openly criticised Ozawa at a lower house meeting, although more attendees applauded those who spoke out in support of Ozawa.

"Whether he should step down or not is up for him to decide," Democrat lawmaker Yosuke Kondo told reporters.

"But he should seriously accept the fact that over 80 percent of the people are not persuaded by what he is saying."

The Democrats' woes have given the unpopular Aso a bit of a boost, with more voters now preferring him over Ozawa as premier, a reversal of Ozawa's previous lead.

But while support for Aso's government rose, it was still only 23.2 percent and more than two-thirds of voters declined to give him their backing.

Aso's ratings, which had fallen below 10 percent in one poll before Ozawa's scandal broke, have suffered from a series of gaffes and policy flip-flops.

The LDP has also not been immune from scandals. LDP lawmakers including Trade Minister Toshihiro Nikai have acknowledged accepting donations linked to a construction firm at the heart of the fundraising scandal, although they deny any wrongdoing.

On Thursday, a vice finance minister stepped down after violating an ethics code that bans stock trading.

The Democrats have vowed to reduce bureaucrats' grip on decision-making, stress consumer and worker rights over corporate interests, and adopt a diplomacy less subservient to security ally the United States.

(Additional reporting by Linda Sieg)