Japan's LDP back in power with two-thirds majority with ally

"There's no doubt the LDP will team up with the New Komeito in the new government," LDP senior executive Yoshihide Suga told public broadcaster NHK.

As for cooperation with other parties, he said: "It depends on each policy so we'd like to consider carefully and humbly."

Voters had expressed disappointment with Prime Minister Yoshihiko Noda's Democratic Party of Japan (DPJ), which swept to power in 2009 promising to pay more heed to consumers than companies and reduce bureaucrats' control of policymaking

Exit polls showed the DPJ, which was hit by defections ahead of the vote, winning only 65 seats, just over a fifth of their tally in 2009. Party executive Kohei Otsuka told NHK Noda would likely have to quit over the defeat, in which several party heavyweights lost their seats.

Many voters had said the DPJ failed to meet its election pledges as it struggled to govern and cope with last year's huge earthquake, tsunami and nuclear disaster, and then pushed through an unpopular sales tax increase with LDP help.

Voter distaste for both major parties has spawned a clutch of new parties including the right-leaning Japan Restoration Party founded by popular Osaka Mayor Toru Hashimoto. A dozen parties fielded candidates, confusing many voters.

Exit polls showed Hashimoto's party picking up about 46 seats. That could make it a potential LDP partner if the New Komeito, which is more moderate on security issues than the LDP, decides later to change allies, some analysts said.

"If it is to do with economic policies, the Komeito will probably go along. But if it is more to do with right-wing policies, the Komeito may not agree," said Sophia University professor Koichi Nakano. "The LDP might be tempted to shift to the Japan Restoration Party."

Abe comeback, china troubled

LDP leader Abe, 58, who quit as premier in 2007 citing ill health after a troubled year in office, has been talking tough in a row with China over uninhabited isles in the East China Sea, although some experts say he may temper his hard line with pragmatism once in office.

The soft-spoken grandson of a prime minister, who would become Japan's seventh premier in six years, Abe also wants to loosen the limits of a 1947 pacifist constitution on the military, so Japan can play a bigger global security role.

China's official Xinhua news agency said in an editorial Japan's winning party should formulate its foreign policy with a long-term perspective to repair ties with neighbors.

The news agency said it was a "troubling sign" that some parties in the election had promised to take a tough stand on territorial disputes and increase military spending.

The LDP, which promoted atomic energy during its decades-long reign, is expected to be friendly to nuclear utilities, although deep public safety concerns remain a barrier to business-as-usual for the industry.

High on the list of voter concerns is the economy, which is in its fourth recession since 2000 amid slowing global growth, a strong yen and the territorial row with China.

Abe has called for "unlimited" monetary easing and big spending on public works to rescue the economy. But such policies, a centerpiece of the LDP's platform for decades, have been criticized by many as wasteful pork-barrel politics.

Many economists say that prescription for "Abenomics" could create temporary growth and enable the government to go ahead with a planned initial sales tax rise in 2014 to help curb a public debt now twice the size of gross domestic product.

But it looks unlikely to cure deeper ills or bring sustainable growth, and risks triggering a market backlash if investors decide Japan has lost control of its finances.

Japan's economy has been stuck in the doldrums for decades, its population ageing fast and big corporate brands faltering, making "Japan Inc" a synonym for decline.

Consumer electronics firms such as Sony Corp are struggling with competition from foreign rivals and burdened by a strong yen, which makes their products cost more overseas.

Lawyers were expected to quickly file suits complaining the election is unconstitutional after court rulings that the difference in the "weight" of votes was too great between densely populated urban areas and sparse rural areas.

Judges were unlikely to rule the election invalid, experts said, but the controversy could further erode trust in politics.

- Reuters