Japan PM to fend off challenge

JAPANESE Prime Minister Junichiro Koizumi looks set to retain his post of party chief this week as he battles to remain at the helm of the world's second-largest economy.

MPs and members of the ruling Liberal Democratic Party will vote for the post on Saturday but newspaper surveys give Koizumi, who took the reins in 2001, a clear lead over his three rivals.

Nihon Keizai Shimbun, the country's leading business paper, claimed: 'Prime Minister Koizumi assured re-election.'

Its poll of local LDP officials and members showed that Koizumi would take about 60% of the votes from its 1.4 million members.

The handling of the stuttering, deflation-hit economy has emerged as the central theme of the lop-sided contest. The head of the LDP typically also holds the Prime Ministership.

All three rivals - ex-LDP policy chief Shizuka Kamei, 66, former Foreign Minister Masahiko Komura and former transport minister Takao Fujii - want to ditch Koizumi's tight fiscal stance.

Pundits claim the PM may reshuffle the Cabinet the day after the party poll. Commentators say reformist Economics and Financial Services Minister Heizo Takenaka may go in the rejig.