Japan PM support below 60 percent as coalition bickers

TOKYO (Reuters) - Support for Japan's government has fallen below 60 percent for the first time since taking office in September, a survey showed on Monday, as it struggles to craft an economic package and resolve a security feud with Washington.

Support for Prime Minister Yukio Hatoyama's government, which came to power after trouncing the long-dominant Liberal Democrats in an August election, stood at 59 percent, down 4 points from last month's survey and off initial highs of more than 70 percent, a Yomiuri newspaper survey showed.

Among those who said they do not back the cabinet, 27 percent cited Hatoyama's lack of leadership, up 13 points from the previous survey, the daily said, a potentially ominous sign ahead of an upper house election in mid-2010.

Voter dissatisfaction with Hatoyama's explanations of a political funding scandal also appear to be eating into his support, the newspaper said.

On Friday the government was forced to delay an agreement on an economic stimulus package, with a small party in the ruling coalition seeking more spending to keep a recovery in the world's second-largest economy on track.

Hatoyama said on Monday the government would decide on the stimulus package that day but Chief Cabinet Secretary Hirofumi Hirano said separately that formal approval would be on Tuesday.

The government is desperate to avoid a return to recession ahead of the upper house election.

The economy, mired in deflation and hit by a rising yen, is only just out of its worst recession since World War Two.

The ruling Democratic Party, also concerned about inflating a massive public debt that is already headed for 200 percent of GDP and faced with falling tax revenues, is seeking total fiscal spending of 7.1 trillion yen ($79 billion). That would comprise 4 trillion yen in immediate spending and 3 trillion yen in tax grants to local governments.

SECURITY FEUD, SCANDAL CLOUD

But outspoken banking minister Shizuka Kamei, who heads the small People's New Party, rejected the proposal, forcing the cabinet to postpone a meeting to sign off on the package.

Hatoyama needs the backing of Kamei's party and another tiny coalition party, the Social Democrats, at least until next year's upper house election since the Democrats lack a majority in parliament's upper chamber, which can stall bills.

The opinion poll reflects Hatoyama's struggle to reach a decision on a plan to relocate a U.S. military base on the southern island of Okinawa, part of a broader plan to reorganize the approximately 47,000 U.S. military personnel in Japan.

Tokyo is under U.S. pressure to implement a 2006 plan to move a Marine air base to a less crowded part of the island.

But Hatoyama, who has vowed to steer a diplomatic stance less dependent on key security ally Washington, said during the August election campaign that he favored moving the base off Okinawa entirely, and his coalition partners oppose any compromise.

A further delay in a decision on the relocation plan risks angering Washington and deepening questions about the future direction of the alliance, long seen as key to stability in a region home to an unpredictable North Korea and a rising China.

Eighty-five percent of voters were also unhappy with Hatoyama's explanations of a funding scandal, including media reports he got tons of cash from his mother without proper accounting, although 54 percent said he need not resign if his former aide is charged in the affair, the Yomiuri said.

Japanese media have said prosecutors would likely decide this week whether to charge the former aide.

(Reporting by Yoko Nishikawa, Writing by Linda Sieg; Editing by Jeremy Laurence)