UPDATE 1-Japan PM candidate Ozawa: may need more debt issue

(Adds quotes, details)

TOKYO, Sept 8 (BestGrowthStock) – Japanese ruling party powerbroker
Ichiro Ozawa, who is challenging Prime Minister Naoto Kan, said
on Wednesday the government may need to issue more debt to fund
economic steps if conditions worsen.

Financial markets are bracing for a shift away from Kan’s
efforts to rein in massive public debt if Democratic Party
heavyweight Ozawa wins the party’s Sept. 14 leadership vote, as
media polls suggest is possible.

The winner of the vote will likely be premier by virtue of
the party’s majority in parliament’s powerful lower house, taking
the helm as Japan struggles with a strong yen, a weak economy,
massive debt and a divided parliament.

“If the yen rises rapidly, we will need to create domestic
demand,” Ozawa told a news conference.

“As a short-term step to cope with the yen’s rise, I think we
should consider intervening in the market. Even though it’s true
that Japan’s solo intervention would not be effective as other
countries accept the yen’s rise, I think (Japanese) authorities
should have the determination (to intervene),” Ozawa said.

On debt issuance, he said: “In terms of economic steps, I am
not saying that debt issuance is necessary now, but depending on
the situation, it may be necessary to consider that.”

Both Ozawa and Kan have vowed to support the economy and
fight the yen’s rise, but efforts have been constrained by public
debt already twice the size of the $5 trillion economy.

Ozawa said there was limited room for the Bank of Japan to
tackle the rise in the yen through monetary policy steps.

“The BOJ has an independent position and I do not think this
is something the government should instruct it on each time,” he
said.

Ozawa’s scandal-tainted image and his history as a backroom
wheeler-dealer makes him unpopular with the general public, but
his clout in the party means more lawmakers could back him in the
leadership vote.
(Reporting by Yoko Nishikawa and Yoko Kubota; Editing by Michael
Watson)

UPDATE 1-Japan PM candidate Ozawa: may need more debt issue