Japanese prime minister Naoto Kan was set to keep his job after winning a ruling party leadership vote today, but a strong showing by his rival among party parliamentarians could weaken his clout, complicating efforts to rein in huge public debt.
Mr Kan (63) who has promised to curb spending and cap borrowing, is already struggling with a strong yen and fragile recovery and will now have to try to unify his fractured party while forging deals with the opposition to pass laws in a divided parliament.
Markets had been braced for a shift toward more aggressive spending if Kan lost to powerbroker Ichiro Ozawa, who had said he would consider issuing more debt if the economy worsened.
The Democratic Party of Japan (DPJ) has floundered since sweeping to power a year ago, and the DPJ and a tiny partner lost their upper house majority in a July election.
Mr Kan won just over half of the votes cast by DPJ parliamentarians, but trounced Mr Ozawa in voting among the party rank-and-file.
Reuters