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Japan PM Hatoyama intends to resign: report

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June 1, 2010

(Reuters) – Unpopular Japanese Prime Minister Yukio Hatoyama intends to resign, public broadcaster NHK said on Wednesday, after a slide in the polls threatened his party’s chances in an upcoming election.

Calls have built up in Hatoyama’s Democratic Party for him to step down to revive the party’s fortunes ahead of an election for the upper house of parliament expected on July 11 that it must win to smooth policymaking.

Analysts have tipped outspoken Finance Minister Naoto Kan as the likely successor if Hatoyama quits after just eight months on the job.

Kan has in the past pressed the Bank of Japan to do more to fight deflation and has sounded more positive than Hatoyama about raising the 5 percent sales tax in the future to fund bulging social welfare costs.

That stance would be welcomed by investors worried about Japan‘s huge public debt, which is nearly 200 percent of GDP.

Political confusion, including the recent departure of a tiny leftist party from the ruling coalition, has distracted the government as it thrashes out a plan to cut huge public debt and a strategy to engineer growth despite a fast-aging population.

If Hatoyama resigns, he will be Japan‘s fourth straight leader to quit after a year or less in office.

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