TOKYO - FRONT RUNNER Taro Aso and his rivals in the race to be Japan's prime minister made final appeals on Sunday, one day before the ruling party picks a new leader it hopes can revive its fading fortunes.

Unpopular Prime Minister Yasuo Fukuda quit earlier this month faced with an economy teetering on recession and a rising opposition vying for a landmark victory in general elections that could come as soon as next month.

Japan opposition holds election ahead of LDP poll TOKYO - JAPAN'S main opposition party held a special convention to re-elect Ichiro Ozawa as its leader on Sunday, while five ruling party candidates made final pitches ahead of their party's vote to replace outgoing Prime Minister Yasuo Fukuda. In sharp contrast to the ruling party's crowded presidential race, Mr Ozawa, one of the founders of the Democratic Party of Japan, was unopposed. ... more

Mr Aso, an outspoken former foreign minister, renewed his pledge to take action to limit the impact of global financial turmoil on Japan and to stimulate the domestic economy.

'We have to do something for domestic demand by reviewing the tax system and other things,' Mr Aso said in a television debate with the four other candidates vying to lead the Liberal Democratic Party (LDP).

Asked if he would draft fresh stimulus measures following Fukuda's package last month designed to ease the impact of high oil and food prices, Mr Aso said: 'Of course, it's possible.'

His rivals include Fiscal and Economic Policy Minister Kaoru Yosano, who has accused Mr Aso of risking Japan's long-term interests through wasteful spending. Japan has the worst public debt of any major economy.

But Mr Yosano, an advocate of tax hikes, also said the new prime minister needed to take action after a week that saw huge swings on global markets and the collapse of Wall Street giant Lehman Brothers.

'No one can predict what the world economy is going to be like. It is natural for the government to take appropriate steps,' Mr Yosano said.

On Monday, the five candidates will compete for a total of 527 party votes - 386 from the LDP members of parliament and 141 from regional chapters.

The other candidates are Ms Yuriko Koike, seeking to be Japan's first female leader, former defence chief Shigeru Ishiba and young reformist Nobuteru Ishihara.

According to surveys conducted by Japanese media, Mr Aso is poised to secure a comfortable majority of the votes, which will give him an outright victory.

Party officials said Mr Aso has already won three votes allocated to a party chapter in central Ishikawa prefecture in early voting.

With Mr Aso's victory seen as likely, the focus has already shifted to the next cabinet and party line-up.

Mr Aso is expected to tap Chief Cabinet Secretary Nobutaka Machimura to replace him as LDP secretary general, the party's number two after the prime minister and a key official in an election, the Yomiuri Shimbun said.

The newspaper said that former farm minister Tadamori Oshima would succeed Machimura as chief cabinet secretary, a powerful position that includes the role of government spokesman.

The LDP has been in power for all but 10 months since 1955. But it lost control of the upper house of parliament last year to the opposition, which charged that LDP free-market reforms were hurting the countryside.

The main opposition Democratic Party of Japan was holding its own election on Sunday. Leader Ichiro Ozawa, a veteran political tactician, is set to be re-elected unopposed.

Speculation is growing that the next prime minister would call snap elections as early as late October in the hopes that new leadership would raise public support. Elections do not need to be held until September next year.

The Fukuda government's approval rating last week stood at a mere 15.6 per cent, even before Farm Minister Seiichi Ota resigned in a scandal over pesticide-laced rice that was served to hospital patients and schoolchildren.

Mr Aso has admitted that the food scare may affect support for the LDP. -- AFP