Analysts said the Democrats' platform - the core of which is a pledge to break bureaucrats' grip on policy to reduce wasteful spending and end the cossetting of vested interests - was unlikely to change much, no matter who leads the party.

The Democrats have also vowed to strengthen the social safety net and revive domestic demand in the midst of a deep recession.

Ozawa's decision to step down also had little impact on financial markets, although many players want to see an end to a political stalemate that has obstructed policy in the world's second-biggest economy as it struggles with its worst recession in 60 years.

Economic woes

Policy making in Japan has been hampered since opposition parties won control of parliament's upper house in 2007, allowing them to delay legislation.

Analysts said the general election was unlikely to be called until after Taro Aso, the prime minister, attends a G8 summit in Italy in early July and after a Tokyo Metropolitan assembly election on July 12, partly in the hope that the economy will improve by then.

"Early August, late August - it's hard to tell," Koichi Nakano, a professor at Sophia University, said.

"Given Aso's record of waiting, unless he's become a different person, he is going to want to wait for a better time."