Japan's unpopular PM signals he's ready to quit

Finance Minister Yoshihiko Noda, a low-key fiscal conservative, is a key contender to succeed Kan.

But sceptics question whether any new leader will fare much better than his five predecessors, none of whom lasted long in office and who all struggled to implement policies to end two decades of economic stagnation and fix the deep structural problems of a fast-ageing society.

"When these two laws pass, I want to implement what I have said I plan to do," Kan told lawmakers before a lower house panel approved that bill, passage of which Kan has said was a prerequisite for his resignation.

Ruling an opposition lawmakers agreed to push the second bill that Kan wants passed through the lower house on Friday, Japanese median reported. Kan's Democratic Party was planning to vote on a new leader as early as August 28, media also said.

A new prime minister will have to find funds to rebuild Japan's northeast from the ravages of the massive March tsunami despite public debt already twice the $5 trillion economy, forge a new energy policy in the wake of the nuclear crisis at a crippled power plant and tackle tax and social security reforms.

Finance Minister Yoshihiko Noda, who like Kan sees reining in ballooning public debt as a policy priority, appears to have pole position. Surveys show, however, that he lacks appeal among ordinary voters and his calls for higher levies could make him an unpopular choice in some quarters of the ruling party.

Whether to raise taxes and how to pull the world's third-biggest economy out of deflation will likely be a focus of the party race, with some potential contenders calling for more aggressive loosening of monetary policy and wary of a plan to double the sales tax to 10 percent by mid-decade.

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