Japan's likely next premier wrestles coalition backlash

TOKYO, Oct 08 (Reuters): Japan's likely next premier Sanae Takaichi is already facing criticism from her ruling party's long-time coalition partner, a rift that could delay or, in an extreme scenario, jeopardise her premiership.

Hardline conservative Takaichi, selected to head the ruling Liberal Democratic Party in a weekend vote, on Tuesday met with the leader of her party's moderate partner Komeito to discuss its concerns about some of her positions.

While Takaichi is expected to win approval in parliament to become Japan's first female premier later this month, it is not guaranteed as the ruling coalition does not have a majority.

If the coalition splits, Takaichi may seek to broker alliances with other parties including the fiscally-expansionist Democratic Party for the People (DPP), further fraying investor nerves about one of the world's most indebted countries.

"Everybody does think that Takaichi probably has the upper hand," said Kei Okamura, managing director at asset manager Neuberger Berman in Tokyo. "It's just a matter of how big of a hand that is."

The yen hit an eight-month low against the U.S. dollar on Wednesday, a move some strategists attributed to the political hiatus and the prospect of a tie-up with the DPP, which advocates for tax cuts and easy monetary policy.

"This is a problem for those hoping for continued fiscal prudence," said Mizuho strategist Jordan Rochester.

A vote in parliament had been due to take place around October 15, but is likely to be pushed back as coalition talks rumble on, LDP sources said. U.S. President Donald Trump is expected to visit Japan at the end of the month.

Komeito, a socially liberal party affiliated with a lay Buddhist organisation, has been in an alliance with the LDP since 1999, and is often seen as a brake on its more hawkish leanings like its step back from pacifism.

The party has criticised Takaichi's tough language on foreigners and visits to the Yasakuni Shrine - seen by neighbours as a symbol of Japan's past militarism. It also wants the LDP to take a tougher response to a fundraising scandal that has rocked the party.