Japan PM: parliament may be extended for bank bill

LIMA, Nov 21 (Reuters) - Prime Minister Taro Aso said on Friday Japan may need to extend its current session of parliament to pass a bill to help struggling banks, a move that would further expose a policy paralysis in the recession-hit economy.

Aso is facing a deepening deadlock in a divided parliament as the main opposition Democratic Party refuses to vote on bills, including one allowing an injection of public funds into regional and other lenders to ease funding for smaller companies.

"If the financial support bill is not enacted because (the opposition) continues to be against it, there are sure to be views from the public that there will be big consequences, including that for financing smaller firms," Aso told reporters.

"If there is opposition to the end, then (the session) may need to be extended more," said Aso, who is in Peru to attend a weekend Asia Pacific Economic Cooperation (APEC) meeting.

The Democrats have stepped up their offensive in the opposition-controlled upper house, saying Aso has reneged on his promise to put the economy first because of his refusal to say when he will submit a second extra budget.

The ruling coalition can pass legislation rejected by the upper house by using its two-thirds majority in the lower house. But if the upper house holds off on a vote, 60 days must elapse from the time the lower chamber first approved the legislation.

That means the current session of parliament would need to be extended beyond its end on Nov. 30 into early January for the banking bill to be enacted without a vote from the opposition.

The political maneuvering comes as the Democrats are increasingly frustrated with Aso's seeming reluctance to call an early election.

Aso was expected to call a snap poll shortly after taking office in September, to seek a mandate to break the stalemate in the divided parliament.

But he has shied from doing so, saying the priority was shielding the economy from the global financial crisis.

Political analysts have said polls showing Aso's popularity slipping since he took office were also making the leader cautious of a vote that need not be held until September 2009.

Aso gave few hints on whether he would call an election any time soon, although he noted that the ruling Liberal Democratic Party had won some elections in the past that it was widely expected to lose.

"The decision would be based on many factors, so you can't say for certain what it would be," he said, when asked what the deciding factor would be. (Reporting by Chisa Fujioka, editing by Vicki Allen)