TOKYO (Reuters) -Anticipation grew on Monday that Sanae Takaichi will become Japan's first female premier, with the backing of the right-wing opposition Japan Innovation Party, known as Ishin, pushing stocks in Tokyo to a record high.
Ishin lawmakers are set to meet later in the day to discuss forming a coalition with the ruling Liberal Democratic Party (LDP), followed by talks between Takaichi and Ishin leaders Fumitake Fujita and Osaka Governor Hirofumi Yoshimura, where the alliance is expected to be finalised.
"The relationship of trust is deepening substantially, and I believe that's what the other party is thinking," Fujita said on Sunday.
Japan's blue-chip Nikkei share index jumped more than 2% in early trading.
A cooperation agreement would deliver a combined 231 seats in parliament's dominant lower house. It would fall two short of a majority, but ensure Takaichi likely wins a vote in parliament tomorrow to pick Japan's next prime minister. She will only need a majority of ballots cast rather than of all members in any runoff vote.
The expected deal with Ishin follows the collapse of the LDP's 26-year coalition with Komeito, which ended its alliance after the ruling party picked Takaichi as its new leader.
Komeito's abrupt withdrawal triggered talks among opposition parties,including the second largest Ishin, that could have derailed her premiership ambitions and thrown her party out of power for the first time in more than a decade. Ishin's decision to side with the LDP ends that possibility.
Takaichi, a fiscal dove, has called for higher spending and tax cuts to cushion consumers from rising inflation and has criticized the Bank of Japan's decision to raise interest rates.
She favors revising Japan's pacifist postwar constitution to recognize the role of its expanding military.
(Reporting by Tim Kelly and Rocky Swift)
