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Edition: U.S. Article Comments (0) Slideshow Video Save Email Print Reprints Most Popular Most Shared Analysis: Obama and Democrats walk tightrope on oil spill 1:02am EDT Euro falls broadly, 4-yearr low vs dollar 1:28am EDT Israeli patrol kills four militants in diving gear 3:08am EDT Euro at 4-year lows while stocks drop on risk flight | Video 2:48am EDT "Twilight" sequel shines at MTV Movie Awards 12:05am EDT BP faces another tough week despite well progress | Video 1:40am EDT Circumcision may prevent sex-related penis injuries 04 Jun 2010 North Korea assembly holds rare session amid sanctions push 1:39am EDT UK Stocks -- Factors to watch on June 7 2:01am EDT Slowdown looming but no double dip 06 Jun 2010 Analysis: Obama and Democrats walk tightrope on oil spill 1:02am EDT Yahoo users to gain more access to Facebook 06 Jun 2010 BP faces another tough week despite well progress | Video 1:40am EDT Restaurant tells diners to eat up or else 04 Jun 2010 "Twilight" sequel shines at MTV Movie Awards 12:05am EDT Circumcision may prevent sex-related penis injuries 04 Jun 2010 Euro at 4-year lows while stocks drop on risk flight | Video 2:48am EDT White hair a "healing sign" with melanoma drugs 06 Jun 2010 Dozens in Florida protest BP's Gulf oil spill 06 Jun 2010 Slowdown looming but no double dip 06 Jun 2010 Next Japan PM to tap fiscal reformers Linda Sieg TOKYO Mon Jun 7, 2010 2:38am EDT Factboxes Factbox: Key political risks to watch in Japan 2:00am EDT Factbox: Five facts about likely Japan strategy min Arai 2:00am EDT Related News Japan's likely next finmin calls for fiscal reform 2:38am EDT Japan's Arai may become economics minister: report 12:29am EDT Related Video Kan elected Japan's new PM Fri, Jun 4 2010 1 / 2 Japan's Prime Minister-to-be Naoto Kan speaks to journalists during a news conference at the Democratic Party of Japan's headquarters in Tokyo June 4, 2010. Credit: Reuters/Issei Kato TOKYO (Reuters) - Japan's new leader, Naoto Kan, will pick a fellow fiscal conservative for the key finance minister post and a critic of an unpopular powerbroker as his party No. 2 in a bid for voter support in an election next month. World | Japan Kan, Japan's fifth leader in three years, has improved his Democratic Party's chances in an upper house poll it needs to win to avoid policy paralysis, and raised investor hopes that he will rein in a public debt that equals twice the country's GDP. Support for the Democratic Party of Japan (DPJ) has jumped since it voted in Kan on Friday to replace Yukio Hatoyama, who quit as premier after just eight months in office, his ratings shredded by indecision and broken promises. A voter survey by the Mainichi newspaper showed 63 percent had positive expectations for Kan's new government, to be launched on Tuesday. That was in line with other surveys. Thirty-four percent planned to vote for the DPJ in an upper house election expected in July that the ruling bloc needs to win to avoid policy paralysis as Japan struggles to rein in a huge debt and sustain growth despite a fast-aging population. That was a rise from 22 percent last month and twice the figure for the opposition Liberal Democratic Party (LDP), ousted last year in a historic election that ended more than 50 years of almost non-stop rule by the conservative party. Hopes that Kan, a former grassroots activist, will tackle Japan's massive public debt will be bolstered promoting deputy finance minister Yoshihiko Noda to the top finance portfolio, since Noda agrees that fixing tattered state finances is vital. Kan told reporters late on Saturday that he had asked National Strategy Minister Yoshito Sengoku to be chief cabinet secretary -- a critical portfolio -- and media said he would probably make fiscal reformer Koichiro Genba DPJ policy chief. Both are positive about raising Japan's 5 percent sales tax in the future to fund the bulging costs of an aging society and to reduce dependence on borrowing to fund spending. "We promised not to raise the sales tax until the next general election so we cannot. But after the next general election, we must speedily carry out drastic tax reform including the sales tax and we must state that in our manifesto for the upper house election," Genba said in a TV debate. An election for the lower house must be held by late 2013. CHANGE IN PARTY NO. 2 Kan also said he would appoint administrative reform minister Yukio Edano to replace campaign strategist Ichiro Ozawa as party secretary-general, the party's No.2 executive. It was the latest sign that Kan is distancing himself from the powerful but scandal-tainted lawmaker. The extent of Ozawa's influence matters not only to voters worried that he is reviving the pork-barrel spending and vested interest politics perfected by the LDP during its half-century rule, but to financial markets concerned about Japan's debt. "We must show the markets that our finances are sustainable," Genba said in the TV debate with opposition party lawmakers. Ozawa, who leads the largest bloc of lawmakers in the Democratic Party, has opposed a clear statement on the sales tax ahead of the upper house election for fear of losing votes. Analysts said Ozawa, a former LDP heavyweight who left the then-ruling party in 1993 and spent the subsequent years striving to create a viable alternative, was unlikely to be completely sidelined despite lacking an official post. That could spell headaches for Kan, sooner if Ozawa schemes behind the scenes, and later if the Democrats fail to perform well in the upper house election. In a nod to the need for party unity, Kan appointed Shinji Tarutoko, who competed with Kan for the party leadership last week, to the party's post in charge of parliamentary affairs. In the leadership contest by the party's lawmakers, Tarutoko garnered about 30 percent of votes, many from Ozawa supporters. The party will stay in power regardless of the outcome of the upper house election, by virtue of its huge majority in parliament's lower house. But without an outright majority in the upper chamber, it is likely to have to revamp its coalition with the tiny conservative People's New Party to get the votes needed to pass laws smoothly. Media said Kan would keep many ministers, including Foreign Minister Katsuya Okada, in their posts. Okada faces the tough task of helping Kan keep ties with close ally the United States on track, since an agreement to keep a U.S. airbase on Okinawa island -- forged amid controversy in Hatoyama's final days -- faces stiff local opposition. (Additional reporting by Hideyuki Sano; Editing by Sugita Katyal) World Japan Add a Comment *We welcome comments that advance the story directly or with relevant tangential information. We try to block comments that use offensive language or appear to be spam and review comments frequently to ensure they meet our standards. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. © Copyright 2010 Thomson Reuters Editorial Editions: Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom United States Reuters Contact Us Advertise With Us Help Journalism Handbook Archive Site Index Video Index Analyst Research Mobile Newsletters RSS Podcasts Widgets Your View Labs Thomson Reuters Copyright Disclaimer Privacy Professional Products Professional Products Support Financial Products About Thomson Reuters Careers Online Products Acquisitions Monthly Buyouts Venture Capital Journal International Financing Review Project Finance International PEhub.com PE Week FindLaw Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. 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