In June 5 story, corrects first name of expected finance minister to Yoshihiko from Katsuhiko in 5th paragraph)

Support for Japan’s ruling Democratic Party leaped to 36.1 percent in a poll published by Kyodo news agency on Saturday after the appointment of a new leader in the run-up to an upper house election.

The figure was up 15.6 percentage points on a poll carried out at the end of May before unpopular prime minister Yukio Hatoyama stepped down and was replaced as party head, and thus premier, by Naoto Kan.

Kan, 63, will become Japan’s fifth prime minister in three years, taking over as the country struggles to rein in a huge public debt, engineer growth in an ageing society, and manage ties with security ally Washington and a rising China.

Kan’s rise and his cabinet line-up, set to be announced on Tuesday, could spell bolder steps to contain a public debt twice the size of the economy. But he faces opposition from many in his party before the election, expected in July.

He has picked Yoshihiko Noda as finance minister, Kyodo said, a choice that will be welcomed by the bond market because he favours fiscal discipline and has supported the idea of capping new debt issuance for next year.

Satoshi Arai, a former aide to the outgoing Hatoyama, is to become national strategy minister, Kyodo said. Kan will keep Foreign Minister Katsuya Okada and Defence Minister Toshimi Kitazawa, but plans to replace eight cabinet members, the agency said.

In the Kyodo telephone poll carried out on Friday and Saturday, 57.6 percent of respondents said they had high expectations of Kan, a fiscal conservative with a reformist image.

That compares with just 19.1 percent of respondents to a similar question posed in the May poll on expectations of Hatoyama, Kyodo said.

Nearly 33 percent of respondents said they planned to vote for the Democrats in the upper house election, compared with 23.4 percent for the main opposition Liberal Democratic Party, which had been in the lead in the previous poll, Kyodo said.

OZAWA PROBLEM

Unlike many recent premiers, Kan has no connection with a political dynasty. That could appeal to voters weary of leaders from well-to-do backgrounds who prove inept at governing.

He got his start in politics as a student activist, later joining small political parties before helping to found the then-opposition Democratic Party in 1996.

But among Kan’s biggest immediate headaches may be Ichiro Ozawa, the former party secretary general widely seen to have held sway over Hatoyama’s government from behind the scenes.

Kan has made clear he wants to sideline the 68-year-old Ozawa. Funding scandals linked to him, over which three of his current and former aides were indicted, were one of the main reasons for the Democrats’ loss of voter support.

Many of Ozawa’s supporters backed Kan’s rival for the top party job and on Friday he hinted he would not fade away.

“I’m sorry I did not come to the forefront this time,” the Yomiuri newspaper quoted him as telling supporters, some of whom had urged him to stand against Kan.

“But the real contest comes in September,” he added, referring to the next party leadership election.

Ozawa is known as a master campaign strategist, but is reluctant to promise bold fiscal reform steps such as raising the sales tax ahead of the upper house poll.

The Democrats have a large lower house majority and will run the government whatever the outcome of the July upper house poll. But the ruling bloc needs to win a majority in that chamber to ensure that legislation is enacted smoothly.

(Editing by Ron Popeski)