Japan PM Abe plans to compile 2 trillion yen stimulus package: Yomiuri

Shinzo Abe and Trump

Getty*Reuters Prime Minister Abe has said now is"not the time for dialogue

Japan's Prime Minister Shinzo Abe has called a snap election, with the parliament to be dissolved on Thursday (local time).

The euro was on a soft note versus the dollar, with German Chancellor Angela Merkel's ruling conservative bloc expected to face hard coalition talks after winning Sunday's general election for the lower house of the country's parliament.

The upcoming election was announced hours after Yuriko Koike, the governor of Tokyo, announced the formation of a new party that could give conservative voters an alternative to Abe's ruling Liberal Democratic party (LDP).

That was higher than the 27.7% a Kyodo news agency survey showed voting for Abe's party, with 42.2% undecided. Abe has said that the polls won't distract his government from responding to North Korea.

"North Korea's nuclear weapons either already are, or are on the verge of becoming, hydrogen bombs", he argued.

Japanese voters could see the election as "cynical and opportunistic move" meant to distract from recent allegations, said Yoel Sano, an analyst at Business Monitor International (BMI) research.

"Can we continue letting (the existing lawmakers) handle politics?"

The dollar met with "heavy profit-taking pressure" around ¥112.50, an official at a major Japanese bank said. Also, opposition parties are regrouping and unprepared for an election.

Abe said Japan's "biggest problem" was a declining number of children in an ageing society. The increase in Abe's ratings may help him retain his coalition's two-thirds majority in the lower house of parliament.

The prime minister also announced a 2tn yen ($17.8bn, £13.2bn) stimulus package on education and social spending.

Mr Abe demanded strict implementation of United Nations sanctions on North Korean leader Kim Jong Un's regime, the latest round of which includes a ban on the country's textile exports and a freeze on work permits to North Korean guest workers.

This "may seem normal in Japan but from overseas, it is hard to understand", Yora told AFP.

Abe was the first world leader to cultivate close relations with US President Donald Trump, meeting the tycoon in Trump Tower even before he was inaugurated.

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