Japanese Finance Minister Yoshihiko Noda intends to resign after passage of a crucial bill to fund this year's budget, possibly later this month, and will run in a ruling party leadership race to replace Prime Minister Naoto Kan, the Sankei newspaper reported on Tuesday.

Other Japanese media also said Noda, a fiscal hawk who favors raising the sales tax to fund bulging social security costs, would announce his intention to run in a Democratic Party leadership race, but they did not mention any plan to resign.

Speaking to reporters on Tuesday, Noda stopped short of commenting on whether he will run in the leadership race, saying he will fulfill his duty as a member of Kan's cabinet.

Kan, his voter ratings sagging at well below 20 percent, has said he will hand over to his Democratic Party's younger generation but has not specified when, and rivals in his party appear to be growing frustrated.

If Noda or other key cabinet ministers were to resign, that would boost pressure on Kan to keep his promise.

Noda, 54, has played a key role in mapping out Japan's reconstruction after a devastating earthquake and tsunami in March and in coordinating policy with its G7 partners to tackle the latest global financial crunch.

He is also the voice of fiscal discipline in the ruling party and advocates raising the 5 percent sales tax to help rein in a public debt that has grown to twice the size of the $5 trillion economy.

Noda is expected to express his intention to run in the leadership race later Tuesday, the Sankei newspaper and other media said, citing sources close to Noda.

(Reporting by Rie Ishiguro; Editing by Linda Sieg and Michael Watson)

Japan