TOKYO, Sept 26 (Reuters) - Japan's main opposition party picks its new leader and possibly the next prime minister on Wednesday, with the successful candidate having to formulate a stance on China as relations fray over disputed islands in East China Sea.
Leading contenders in the race for head of the conservative Liberal Democratic Party (LDP) have all struck hawkish tones as the long-simmering row flared up this month after Prime Minister Yoshihiko Noda's government bought some of the disputed islets from their private Japanese owner.
The LDP, long a broad umbrella party home to both security hawks and doves, has tilted to the right in recent years, though Noda also hails from the conservative wing of his diverse party.
The LDP's current number two, Nobuteru Ishihara, 55, has blamed Noda's ruling Democrats for weakening Japan's alliance with the United States, which he says in turn has emboldened its neighbours to test Japan's resolve to protect its territory.
Former defence minister Shigeru Ishiba, 55, seen as Ishihara's main rival, says Japan's pacifist constitution should be revised to ease its restrictions on military action and called for Japan to have its own Marine Corps.
Ex-prime minister Shinzo Abe, 58, who also advocates revision of the U.S.-drafted constitution, wants to replace the historic 1995 statement by then-prime minister Tomiichi Murayama apologising for suffering caused by Japan's wartime aggression - a stance hardly likely to win friends among Asian neighbours.
Opinion polls suggest that the LDP, ousted in 2009 after more than 50 years of almost non-stop rule, will come first in a lower house election expected within months, but will need a coalition partner.
A tie-up with a party led by populist Osaka Mayor Toru Hashimoto, which critics say is tapping simmering nationalist sentiment, could drag a new coalition to the right, making it harder to manage already rocky ties with China and South Korea.
Abe - who quit abruptly due to ill-health in 2007 - is eyeing a possible alliance with Hashimoto. Ishiba could also be a potential partner for the 43-year-old Osaka mayor.
Ishihara, backed by party elders inclined to do business with the Democrats, is considered the most moderate. However, the fact that he is the son of nationalist Tokyo Governor Shintaro Ishihara, a fierce China critic, may also act as irritant in dealings with Beijing.
It was Ishihara senior's plan to have his metropolitan government buy the islands with private donations and build facilities there to "protect" them that prompted the central government's ill-fated counter bid that it had hoped would help calm things down.
Whoever takes charge of the world's third-largest economy after the general election, expected as early as November, will face a pile of unfinished business and deep-rooted problems dogging the Japanese economy.
The rebuilding of northeast Japan after the March 2011 earthquake and tsunami is far from complete and the full decommissioning of the crippled Fukushima nuclear plant will take decades.
Any new government will have to grapple with a revamp of energy policy amid deep public worries about nuclear safety.
On top of that, the plan to double the sales tax that Noda managed to push through an opposition-controlled upper house by promising early elections is seen as just a first step towards reining in Japan's ballooning public debt.
Editing by Tomasz Janowski and Linda Sieg