By Linda Sieg
TOKYO (Reuters) - Japan's conservative Liberal Democratic Party (LDP) is on track for a stunning victory in Sunday's election, returning to power with hawkish former Prime Minister Shinzo Abe at the helm, and possibly ending Japan's political gridlock.
Opinion polls by the Asahi, Yomiuri and Nikkei newspapers on Friday forecast that the LDP was headed for a hefty majority in the powerful, 480-seat lower house of parliament.
The LDP and its smaller ally, the New Komeito party, could even gain the two-thirds majority needed to break through a policy deadlock that has plagued the world's third biggest economy since 2007.
An LDP win on Sunday would usher in a government committed to a tough stance in a territorial row with China, a pro-nuclear power energy policy despite last year's Fukushima disaster and a radical recipe of hyper-easy monetary policy and big fiscal spending to end persistent deflation and tame a strong yen.
Japanese business sentiment worsened for a second straight quarter in the three months to December and will barely improve next year, a central bank survey showed on Friday, strengthening the case for the Bank of Japan to take bolder action to support an economy already in recession.
Between 30 percent and nearly 50 percent of voters were undecided with just days to go, the surveys showed. Experts said that was unlikely to affect the general trend, although turnout will probably fall below the 69.28 percent seen in the last lower house election in 2009.
DEBACLE FOR PM'S PARTY
Contributing to the indecision is a fragmentation of the political landscape that has resulted in a dozen parties, some of them just weeks old, contesting the election, and confusion over policy differences between the main contenders.
"Unlike the past two (lower house) elections, the main points of contention are not so clear and in that sense, it is hard for voters to understand," said Yukio Maeda, a political science professor at the University of Tokyo.
"But if there is no huge news, bad or good, in the next few days, there is unlikely to be a shift that is beneficial or detrimental to any particular party," he said.
The surveys showed that Prime Minister Yoshihiko Noda's Democratic Party of Japan (DPJ), which surged to power three years ago promising to pay more heed to consumers than corporations and break bureaucrats' stranglehold on policymaking, could win fewer than 70 seats. That would be its worst showing since its founding in 1998, the Nikkei said.
The new right-leaning Japan Restoration Party, created by popular Osaka Mayor Toru Hashimoto and now led by outspoken nationalist Shintaro Ishihara, was struggling and might win fewer than 50 seats, the Asahi newspaper showed.
If the LDP and the New Komeito control two-thirds of the lower house they could enact legislation even if it is rejected by the upper chamber, where they currently lack a majority.
Since 2007, no ruling bloc has had a majority in the upper house, which can block bills other than treaties and the budget.
But over-riding the upper house is a cumbersome and time-consuming process, so the LDP and its ally will be aiming to win a majority in that chamber in an election for half its seats set for July.
(Reporting by Linda Sieg; Editing by Paul Tait)