Japanese prime minister proposes snap election

<p>The Japanese prime minister has proposed a snap election.</p>

Japanese prime minister Yoshihiko Noda has proposed to dissolve parliament and hold a snap election.

As such, the leader of the world's third-largest economy has indicated the call to open the polls is conditional on opposition support for a financing bill and voting reform.

His proposal has come amid fears the nation is headed for recession, after its economy shrank by 0.9 per cent in the July-September period quarter on quarter, while most analysts have anticipated contraction in the fourth quarter.

According to knee-jerk reactions in the polls, a snap election would see the incumbent Democratic Party lose after it ended the Liberal Democratic Party's 50-year rule.

Japan has been struggling as a result of the global economic downturn, with its export-heavy economy treading water as orders are cut by key trading partners the US and Europe.

At close of play in Tokyo this morning, the Nikkei 225 was higher by 1.9 per cent to 8829.7 points.

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