Tokyo - Japan's governing Liberal Democratic Party (LDP) selects a new leader on Monday as the world's second largest economy copes with the turmoil of the global financial crisis.

Taro Aso, the party's secretary general, is tipped to succeed outgoing Prime Minister Yasuo Fukuda in a contest with four other candidates, including the first woman to run for the post, former defence minister Yuriko Koike, 56.

The winner is assured of becoming prime minister because the LDP holds a comfortable majority in the lower house of parliament, the House of Representatives, which elects the head of government.

But the new premier might only be in power for a few weeks amid speculation the lower house may be dissolved and a general election called for October 26.

The president of the opposition Democratic Party of Japan (DPJ), Ichiro Ozawa, 66, said Sunday that an early election presents a good opportunity to end half-a-century of LDP dominance.

Political analysts, however, say media attention on the polls may benefit the governing party and help boost its support.

The LDP has gone through 13 presidents in the past 20 years and is losing some of its shine as it seeks to regain public trust.

Fukuda, 71, announced his shock resignation on September 1, less than a year after he came to power, following difficulties is getting legislation through the opposition-dominated upper house, the House of Councillors.

His predecessor, Shinzo Abe, also stepped down suddenly, citing health issues as the reason. But many said he took responsibility after the opposition blocked his bid to extend Japan's role in an international military mission in the Indian Ocean.

In the meantime, the economy has ended its longest post-war expansion and entered a recession. The income gap has also widened, creating a class of poor that has difficulty securing stable jobs.

Aso, 68, who admits to liking for manga comics, believes he his the right man to lead the LDP and steer it to victory in a general election, even though he has lost three previous bids for the party leadership.

The grandson of former prime minister Shigeru Yoshida, he has said he plans to revive the sluggish economy through increased government spending. He also pledged to deliver a supplementary budget for the current fiscal year before the lower house is dissolved.

In doing so, Aso may pull Japan back into the old LDP-style of politics of mounting debt, and the reform course of former premier Junichiro Koizumi may end, according to analysts.

On foreign policy, the veteran politician, who served as a foreign minister under Koizumi, has shown willingness to promote better relations with Japan's Asian neighbours, while acknowledging that some problems remain.

Often referred to as a hawk, Aso has been criticized for slips of the tongue, worrying Asian nations that suffered from Japan's wartime aggression. The fourth-generation Catholic also intends to continue refueling assistance for US-led anti-terrorism operations in Afghanistan.

Former skeet Olympic competitor Aso thinks he has the talent and stamina a nation's leader needs and stays on.

But there is no guarantee that LDP support under Aso will be enough to win the next general election. Some political analysts see a chance of opposition DPJ taking power. (dpa)