(Corrects paragraph 19 spelling of Resona Bank)
* Trade minister was high-profile, possible future PM
* Scandals come as PM confronts tough decision on sales tax
* Resignations may hamper plans to reboot reactors
* Further resignations could raise questions about PM himself
By Linda Sieg
TOKYO, Oct 20 (Reuters) - Two Japanese cabinet ministers resigned on Monday over the dubious use of political funds, dealing Prime Minister Shinzo Abe his biggest setback since he took office in December 2012.
The resignations of the two women, including the high-profile trade and industry minister, could complicate tough decisions on key policies, including whether to go ahead with an unpopular plan to raise the sales tax and planned restarts of nuclear reactors shut down after the 2011 Fukushima disaster.[ ID:nL3N0SF1LX]
Abe hopes to contain the damage through swift replacements of the two, but the opposition is looking for other potentially vulnerable ministers also appointed in an early September cabinet reshuffle. Further resignations could raise doubts about Abe’s own future, some political experts said.
“There are more than two (other) ministers with regard to whom there are suspicions,” Yukio Edano, the opposition Democratic Party’s second-in-command, told reporters. “We will coordinate our actions among opposition parties, point out the problems and ask for explanations about the other ministers.”
He did not identify the ministers nor explain how the opposition planned to seek any explanations.
Trade and industry Minister Yuko Obuchi, 40, the daughter of a prime minister and tipped as a future contender to become Japan’s first female premier, tendered her resignation after allegations that her support groups misused political funds.
Just hours later, Justice Minister Midori Matsushima also resigned. The opposition Democratic Party had filed a criminal complaint against Matsushima, accusing her of violating the election law by distributing paper fans to voters.
Obuchi and Matsushima were two of five women appointed by Abe in the cabinet reshuffle, a move intended to boost his popularity and show his commitment to promoting women as part of his “Abenomics” strategy to revive the economy.
“I appointed them and as prime minister, I bear responsibility,” Abe told reporters at his office. “I deeply apologise to the people of the nation.” Abe added he wanted to pick successors for the two posts within the day.
As head of the powerful Ministry of Economy, Trade and Industry (METI), Obuchi, a telegenic mother of two, was tasked with selling Abe’s unpopular plan to restart nuclear reactors to a wary public worried about safety. The process to restart the reactors is made difficult but unlikely to be delayed by her resignation, officials said.
Media said Abe had picked the Harvard-educated Yoichi Miyazawa, 64, a former vice economics minister and the nephew of the late prime minister Kiichi Miyazawa, to replace Obuchi, and Yoko Kamikawa, 61, a former gender equality minister, for the justice portfolio. She also studied at Harvard.
The departures are the first cabinet resignations for Abe, who took office in December 2012 for a rare second term, promising to revive Japan’s stalled economy and strengthen its security stance to cope with challenges such as a rising China.
Abe’s first stint as prime minister in 2006-2007 was marred by scandals among his ministers - several quit and one committed suicide. Abe himself resigned after just one year in the face of parliamentary deadlock, sliding support rates and ill health.
His current government had been little touched by scandal until the cabinet reshuffle. Abe’s ruling coalition has a hefty parliamentary majority and no general election need be held until 2016, but the opposition Democrats have taken aim at new ministers in debates to try to dent Abe’s popularity.
Defence Minister Akinori Eto, also appointed in September, has faced questions from the opposition over his political funds.
“They are trying to limit the damage by getting rid of those (two) quickly,” said Tomoaki Iwai, a political science professor at Nihon University. “But Abe’s support will decline and ... policy implementation will not go smoothly,” he said, adding the situation would become far tougher if other ministers also quit.
The Tokyo stock market took the resignations in stride. The Nikkei share average surged 4.0 percent in its biggest daily rise since June 2013 as investors took heart from upbeat U.S. data and the weaker yen lifted exporters.
Abe must decide by year-end whether to implement a planned hike in the sales tax to 10 percent from October 2015. A rise in April to 8 percent pushed the world’s third-largest economy into its deepest quarterly slump since the 2009 global financial crisis.
“I think there is a big possibility that in order to prevent his support rates from falling, the sales tax rise could be delayed for a year and a mid-sized economic package crafted,” said Koichi Kurose, chief economist at Resona Bank.
Abe’s support fell 6.8 percentage points to 48.1 percent in a weekend survey by Kyodo news agency from last month. Nearly two-thirds opposed a second tax hike and almost 85 percent said they didn’t feel the economy had recovered.
The scandals could also dampen the outlook for a bill to legalise casino resorts, a move that Abe has said would help the economy by boosting tourists but which many voters oppose and about which Abe’s coalition partner has doubts. ($1=107.1800 Japanese yen) (Additional reporting by Elaine Lies, Antoni Slodkowski, Kaori Kaneko, Kiyoshi Takenaka and Tetsushi Kajimoto; Editing by Eric Walsh and Raju Gopalakrishnan)