The Japanese Prime Minister, Naoto Kan, will keep his job after an unexpectedly decisive victory in his party's leadership vote.
But he must now unify the Democratic Party of Japan and forge deals with the opposition in a divided parliament. Mr Kan, 63, who has pledged to curb spending and borrowing, is struggling with a strong yen, a fragile recovery and public debt that is twice the size of Japan's $5 trillion (£3.2 trillion) economy.
Markets had been braced for a shift toward aggressive spending if Mr Kan had lost to Ichiro Ozawa, a scandal-tainted powerbroker who said he would consider issuing more debt if the economy worsened. Mr Kan was favoured by most ordinary voters but Mr Ozawa's strong support among MPs made the outcome of the vote far from certain.Reuse content