Japan's ruling coalition retained its majority in a weekend general election but the opposition made strong gains and media said on Monday that Prime Minister Junichiro Koizumi could have trouble pushing ahead with reforms.

The three-party coalition won 275 seats in parliament's 480-seat Lower House, down from 287, and Koizumi's Liberal Democratic Party (LDP) lost the simple majority it had held on its own, Japanese media said, estimating that the LDP had won only 237 seats against its previous 247.

Home Affairs Ministry officials said that the final tally had not yet been compiled due to confusion in some constituencies and would not be available until late on Monday or even Tuesday.

Pictures of a grim-faced Koizumi appeared on the front pages of Japan's leading newspapers. Other photos showed a beaming Naoto Kan, leader of the opposition Democratic Party.

"Election undermines ruling coalition's mandate," was the headline over the conservative English language Daily Yomiuri's editorial.

Both the Yomiuri and the right-wing Sankei Shimbun criticised the LDP for failing to capitalise on signs of an economic upturn and the personal popularity of Koizumi and LDP Secretary-General Shinzo Abe.

The Yomiuri said voters were probably "frustrated with the Koizumi administration's policies and lack of achievement".

Analysts said Tokyo's stock market could trade lower on Monday because of Koizumi's reduced majority. There was no immediate reaction on the foreign exchange market, with the yen trading at 109.35 per dollar, hardly changed from Friday.

Many in the long-ruling LDP oppose Koizumi's reforms but had hoped that the telegenic, wavy-haired prime minister's popularity would help them win a decisive victory in the first general election since he took office in April 2001.

The failure of the LDP, a mix of reformists and foot-dragging conservatives, to maintain its own majority was likely to weaken Koizumi's hand against the anti-reformers.

But he appeared likely to stay at the helm of government, given his coalition's overall majority.

The Democratic Party, a generally pro-reform group, took 177 seats, up from 137 but short of Kan's target of 200.

Koizumi, 61, leapt to power in April 2001 on a wave of public support for his promises to cut spending, privatise money-guzzling government corporations and fix the ailing banks.

But he has a mixed record on reform, some criticising him for going too fast and others saying he is too timid.

TWO-PARTY SYSTEM?

The strong showing by the Democrats moves Japan closer to the two-party system that many voters seem to want after nearly 50 years of what has effectively been single-party rule.

"This is one step towards a change in government and a big move towards a two-party system," said Yasunori Sone, a professor at Keio University in Tokyo.

Koizumi will have to rely heavily on his alliance with the number two partner in his coalition, the Buddhist-backed New Komeito, which won 34 seats, up from 31.

The Democrats, for their part, had deployed a detailed manifesto + including pledges to cut public works spending and loosen the grip of bureaucrats on policy + to persuade voters that they were the true party of change.

"One thing that stands out is that the Democrats did quite well despite a low turnout. This is a blow to the LDP," said Shuji Shirota, an economist at Dresdner Kleinwort Wasserstein.

"What this tells us is that for the voters, Japan's economic recovery has not been tangible," he said.

Turnout was 59.86 percent, a Home Affairs ministry official said. This was only slightly higher than the record low of 59.65 percent in 1996.

Political analysts had said a strong showing by the Democrats would require high voter turnout, which usually means@ballots cast by "floating voters" who tend not to like the LDP.

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