TOKYO (Reuters) – Japanese Prime Minister Naoto Kan kept political allies in key posts in a cabinet reshuffle on Friday, signaling he plans to try to press ahead with efforts to curb the country’s huge debt.

In a sign that worries about Japan’s fragile economic recovery could complicate those efforts, Kan was to instruct his new cabinet to compile an extra budget for the current fiscal year to March 31, Kyodo news agency reported.

TOKYO (Reuters) – Japanese Prime Minister Naoto Kan will keep political allies in key posts when he reshuffles his cabinet later on Friday, media said, signaling he plans to press ahead with efforts to curb the country’s huge debt.

Media have said Kan was likely to retain Finance Minister Yoshihiko Noda, who earlier this week oversaw Japan’s first intervention in the currency markets in six years to stem a rise in the yen and protect the export-reliant economy.

BEIJING/TOKYO (Reuters) – Japan on Monday freed the crew of a Chinese fishing boat held last week in disputed waters, leaving unclear what will become of the arrested captain at the center of a territorial rift between the two neighbors.

“The 14 illegally held Chinese boat crew members were released by Japanese coast guard authorities,” China’s official Xinhua news agency said in a brief report which did not mention the arrested captain, Zhan Qixiong, as among those released.

TOKYO (Reuters) – The Bank of Japan (BOJ) should expand its outright buying of long-term Japanese government bonds (JGB) to help beat deflation, an aide to the ruling party powerbroker challenging Prime Minister Naoto Kan said on Friday.

Tsutomu Okubo, who is helping to form economic policies for the challenger, Ichiro Ozawa, also said Japan should consider ways, such as setting up currency swap agreements, to diversify its massive foreign reserves and include Asian currencies to match its trade weightings.

TOKYO (Reuters) – Japanese ruling party powerbroker Ichiro Ozawa, challenging Prime Minister Naoto Kan in a party leadership vote, said on Wednesday the government may need to issue more debt if the economy deteriorates.

Investors are bracing for a shift away from Kan’s efforts to rein in huge public debt if Ozawa, who is unpopular among the public but has a strong clout in the Democratic Party, wins the September 14 party vote, though media say it is too close to call.

TOKYO/BEIJING (Reuters) – Japan has arrested the captain of a Chinese fishing boat that collided with two Japanese coast guard boats near disputed islets in the East China Sea, causing anger in Beijing and reigniting territorial tensions.

China’s Foreign Ministry lodged a “strong protest” against the captain’s arrest on Wednesday, with Assistant Foreign Minister Hu Zhengyue summoning Japan’s ambassador for the second time in two days, Xinhua news agency said.

TOKYO, Sept 3 (Reuters) – Japan slapped additional sanctions
on Iran over its disputed nuclear programme on Friday, following
the United States in pressuring Tehran despite Tokyo’s reliance
on oil imports from the country.

The measures that go beyond requirements in a U.N. Security
Council resolution include restrictions such as banning financial
activity with 15 designated Iranian banks that could contribute
to nuclear activities — a step that could affect some Japanese
major banks.

TOKYO, Sept 1 (Reuters) – Prime Minister Naoto Kan and
rival Ichiro Ozawa clashed over fiscal priorities on Wednesday
in a battle for party leadership that threatens a policy vacuum
as Japan struggles to tackle a strong yen and weak economy.

The strife in the Democratic Party of Japan (DPJ), which
swept to power a year ago promising change, underscores a
policy rift that could derail Kan’s efforts to curb a public
debt already twice the size of the $5 trillion economy.

TOKYO (Reuters) – Japanese powerbroker Ichiro Ozawa confirmed on Tuesday he would challenge Prime Minister Naoto Kan in a party vote, setting up a clash that risks creating a policy vacuum as Japan struggles with a strong yen and fragile growth.

The strife in the Democratic Party of Japan, which could split the party just a year after it took power for the first time promising change, coincides with policymakers’ efforts to curb a rise in the yen that threatens economic recovery.

TOKYO (Reuters) – Japanese powerbroker Ichiro Ozawa may withdraw his challenge to Prime Minister Naoto Kan in a party leadership race, Jiji news agency said on Monday, as Kan’s predecessor sought to avert a clash that could split the party.

But big questions would remain about how the two rivals would resolve differences over Kan’s drive to rein in Japan’s huge public debt even if an overt confrontation was avoided.