Japan - Voters in Japan flocked to rallies on Tuesday as official campaigning began in an election that is expected to see Prime Minister Taro Aso's party ousted for only the second time in its 54-year history.

Polls show Aso's Liberal Democratic Party (LDP) headed for defeat in the August 30 vote for parliament's powerful lower house, which would usher in a government led by the opposition Democratic Party and raise the chance of breaking a policy deadlock.

The Democrats have pledged to revive the economy by putting more money in the hands of consumers, hold off on raising the 5 percent sales tax for the next four years and adopt a diplomatic stance less subservient to top security ally the United States.

Financial markets would welcome the prospect of smoother policy-making as Japan shakes off a recession, although some analysts say the Democrats' ambitious plans could inflate already high public debt and push up long-term interest rates.

The Democrats and their allies won control of parliament's upper house in 2007 and can stymie legislation.

Facing a crowd of hundreds in the western city of Osaka, Democratic Party leader Yukio Hatoyama accused the conservative LDP of ignoring ordinary voters and said it was time for change.

Everyone, the day has come to rewrite history, declared Hatoyama, the next prime minister if his party wins, to cheers from the crowd, many wearing hats and holding towels and parasols to beat the sun and sweltering summer heat.

With your power, let's have the courage to start a new chapter of politics with you all at the center, he said from on top of a van as voters waved yellow banners and fans, the campaign color for the Democrats' local candidate.

The decade-old Democratic Party has its best-ever shot at seizing power from the LDP, which has ruled for all but 10 months since its creation in 1955 and is struggling with new challenges such as a fast-aging population and China's rising clout.

News on Monday that Japan's economy returned to growth in the second quarter will probably do little to revive the LDP's fortunes, analysts said, even though the figures marked the end of Japan's longest recession since World War Two.


Aso, the 68-year-old grandson of a former prime minister and a fan of manga comics popular with young people, is the third LDP premier in as many years. His two predecessors stepped down after their approval ratings plummeted.

He took office last September but his hopes of leading the party to victory have slid after a string of policy flip-flops, verbal gaffes and scandals in his cabinet.

To woo back voters, Aso is crediting the LDP's economic stimulus packages with helping Japan weather the global financial crisis and has accused the Democrats of being weak on security policy and irresponsible on financial issues.

It is the LDP who will protect Japan. It is the LDP who will protect all the people's livelihoods, Aso told a big gathering of mostly party supporters on the outskirts of Tokyo.

The economy has returned to positive growth and our steps have produced results ... I think we need to continue taking steps for the economy.
Even before Aso took office voter anger with the LDP had been on the boil, especially after it emerged that millions of public pension records had been mishandled and some lost, upsetting the elderly.

It's hard to find anything that's got better under the LDP, said Kiyoshi Ikuta, 52, a part-time services worker in Osaka's bustling Namba shopping district ahead of Hatoyama's speech.

We need a change to stop things from getting worse.

Some voters, however, wondered if the novice Democrats, a mix of former LDP members, ex-socialists and younger conservatives, would fare any better in delivering policies.

The Democrats want to give new allowances to families with children, eliminate expensive highway tolls and end a gasoline surcharge, but critics say the party is fuzzy on how it will fund these steps.

While the party also wants to reduce bureaucrats' meddling in policies to cut wasteful spending, it needs to tap their expertise to write legislation. On foreign policy, the Democrats had pledged to stand up to Washington but have shifted to a more pragmatic line ahead of the election.

The Democrats' policies sound tempting, but I'm not sure if I can trust them to do everything they've promised, said Tadashi Kinoshita, 72, an LDP supporter who works in real estate.

(Additional reporting by Yumi Otagaki, Editing by Dean Yates)