Japan PM party may miss vote target, policy at risk

TOKYO (Reuters) - Japanese Prime Minister Noato Kan's Democratic Party looked increasingly likely to suffer a sharp rebuke in a weekend election, surveys showed, putting his job at risk and threatening efforts to curb Tokyo's massive public debt.

But a senior executive of Kan's Democratic Party of Japan (DPJ) said the prime minister would stay in his job regardless of the party's showing in Sunday's poll to the upper house.

The DPJ, which swept to power just last year promising change, will almost certainly run the government however many seats it wins because it controls the powerful lower house.

But it needs a majority in the upper chamber to avoid policy deadlock in reducing a big public debt.

Surveys by the Nikkei, Yomiuri and Asahi newspapers showed that the DPJ would likely win around 50 or even fewer seats of the 121 up for grabs in the 242-member chamber -- well short of Kan's TARGET (TGT.NY)of the 54 seats the party has up for re-election.

That would deprive the DPJ and its tiny coalition partner, the pro-spending People's New Party, of a majority in the upper house and force the Democrats to seek new allies, hampering the government's ability to forge ahead with the fiscal reform that Kan has put at the heart of his campaign.

"Kan has failed to get voters' minds off what a mess the DPJ has made of being in power," said Columbia University professor Gerry Curtis. "They won't be able to get anything done. It will be political manoeuvring for months to come."

The Democrats swept to power for the first time last year promising to cut waste and focus spending on consumers, but saw their support crumble due to policy chaos and funding scandals.

Support for the DPJ rebounded after Kan, a 63-year-old former grassroots activist, took over from his indecisive predecessor Yukio Hatoyama last month. It later fell back after he floated a possible doubling of the 5 percent sales tax to curb Japan's massive public debt.

KAN COULD FACE CHALLENGE

A showing of fewer than 50 seats for the DPJ would leave Kan -- Japan's fifth premier in three years -- vulnerable to a challenge from party powerbroker Ichiro Ozawa ahead of a leadership vote in September, although few expect him to quit without a fight.

Kyodo news agency quoted Democratic Party Secretary-general Yukio Edano as saying that Kan would stay on regardless of the election outcome.

The Japanese government bond market had rallied last week in part on fiscal reform hopes. The rally has since fizzled on expectations the DPJ would fall well short of its election goal, although many expect that debate on a possible sales tax rise will persist now that Kan has raised the long taboo-topic.

If the ruling party fails to reach its target then yields would likely rise, said Shinji Nomura, chief fixed-income strategist at Nikko Cordial Securities.

The Asahi newspaper said the DPJ could win fewer than 50 seats, but gave a range of between 42 and 57 seats, reflecting the close races in many districts and the hefty chunk of voters who have yet to make up their minds.

"I had a lot of hopes for Kan but the way he brought up the sales tax idea was really bad," said Toshimitsu Kinjo, 54, who works at small publishing company and has yet to decide .

"As they keep saying in the media, there are other things that should be done first," added Kinjo, who said he had voted for the DPJ last year but was now undecided. "Kan is a more practical politician than Hatoyama and I thought he could run the government well, but then he came up with the sales tax talk."

Political parties have also struggled to grab voter interest in Japan's second national election in less than a year, with a betting scandal hitting the national sport of sumo, the World Cup soccer tournament and even heavy rain competing for attention.

Media surveys showed that both the small pro-reform Your Party and the New Komeito, which partnered with the Liberal Democratic Party until its ouster last year, could win around 10 seats, making them attractive potential allies.

The leaders of both parties have ruled out an alliance with the DPJ, but analysts say they might change their tune later.

The upper house can block bills other than treaties and budgets and the DPJ-led coalition lacks the two-thirds lower house majority that would enable it to override the upper chamber.

In the latest sign that the Democrats were struggling, the Nikkei survey showed their lead over the opposition LDP had shrunk, with 32 percent of respondents planning to vote for the DPJ -- down three points -- against 22 percent for the LDP and 11 percent for the Your Party.

Voter support for Kan's government also fell five points to 45 percent in the Nikkei poll, a 23 percent drop from his initial rating after taking office last month.

(Additional reporting by Shinichi Saoshiro; Editing by Ron Popeski)