By Leika Kihara
TOKYO (Reuters) -Japan’s ruling coalition will likely lose its majority in the upper house election on July 20, the Asahi newspaper said on Tuesday, heightening the risk of political instability at a time the country struggles to strike a trade deal with the U.S.
Prime Minister Shigeru Ishiba’s ruling Liberal Democratic Party (LDP) and its coalition partner Komeito will likely struggle to retain the 50 seats needed to defend its majority in the upper house of parliament, the Asahi said.
The LDP will likely win just around 35 seats, the paper said. The LDP currently hold 52 seats.
The benchmark 10-year Japanese government bond (JGB) yield rose to 1.595% on Tuesday, a level unseen since October 2008, as investors brace for the possible loss of fiscal hawk Ishiba as straining Japan’s already frail finances.
Small opposition parties like the Democratic Party for the People and Sanseito, which have called for cutting Japan’s sales tax rate, are likely to increase the number of seats they hold in the chamber, the Asahi said.
Ishiba’s administration has seen approval ratings slide as the rising cost of living, including the soaring price of Japan’s staple rice, hit households.
“As during the previous campaigns, inflation remains a top concern for the public, putting the coalition on the defensive. Ishiba’s low approval ratings reflect voter dissatisfaction with the status quo,” David Boling, a director at consulting firm Eurasia Group, said in a research note, adding he sees a 60% chance of the ruling coalition losing its majority.
“Whether Ishiba steps down will hinge on how many seats the coalition loses,” he added.
Asahi said its report was based on phone and internet surveys conducted on voters July 13-14, as well as research nationwide by the newspaper’s journalists.
(Reporting by Leika Kihara; Editing by Michael Perry)
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