TOKYO - JAPAN was set to be without a central bank chief for the first time in more than 80 years as the opposition Wednesday voted down the latest government nominee for the job.

The vacancy comes at a time of hectic activity by the world's central banks as they try to contain the fallout of a worsening US economy.

Governor Toshihiko Fukui was due to leave office at midnight (1500 GMT) after a five-year tenure steering the world's second largest economy through a gradual recovery from a long recession.

'The government presented its best appointment plan but it was rejected.

It's very regrettable,' Mr Machimura told a news conference.

'We have to accept the result and do our best to make sure the vacuum doesn't last for long,' he said.

The vacancy will be the first since 1923, when the spot was vacant for three days after the nation's deadliest earthquake, which sent the BoJ building up in flames.

Hours before Mr Fukui's term runs out, the opposition-controlled upper house voted down the government's second nominee for the next Bank of Japan governor, Mr Koji Tanami, in a 125-112 vote.

Mr Tanami, who heads Japan's development lending agency, and previous nominee Toshiro Muto, currently the bank's number two, both served previously as top bureaucrats in the finance ministry.

The opposition has argued that both nominees were too entrenched in the finance ministry to preserve the independence of the central bank, which has repeatedly come under government pressure to keep interest rates low.

Mr Yukio Hatoyama, secretary-general of the main opposition Democratic Party of Japan, acknowledged that his side faced criticism for not approving a nominee by Wednesday.

'But we decided it would be a much bigger tragedy for the public to have five years of lost national interest than to have a vacuum for a few days,' Mr Hatoyama said.

The government-led lower house later approved Mr Tanami, but the vote was purely symbolic as nominees need the backing of both houses.

Parliament has been divided since the opposition in July won control of the upper house in a landmark defeat for the ruling Liberal Democratic Party, which has been in power almost continuously for a half century.

'I've been in parliament for 25 years and I've never seen such a terrible situation,' said Mr Machimura, the chief cabinet secretary.

The opposition's refusal to approve nominees comes as approval ratings for Prime Minister Yasuo Fukuda's six-month-old government slide to new lows following a series of mishaps.

Two weekly magazines out on stands Wednesday coincidentally used the same headlines to describe the Fukuda government, calling it 'brain-dead'.

The opposition has also argued that the next central bank chief needs to have experience dealing with overseas counterparts in light of recent market turmoil triggered by a US economic downturn.

The Bank of Japan this week has injected more than eight billion dollars of funds into the domestic banking system to curb rising market interest rates.

The upper house has approved two government picks to be deputy Bank of Japan governors, one of whom would likely be asked to serve as interim head of the central bank if the deadlock continues for the top spot.

On Tuesday, the upper house approved Mr Kiyohiko Nishimura, a statistician at the prestigious University of Tokyo and a former research fellow at Washington's Brookings Institution.

The upper house also earlier approved another academic, Mr Masaaki Shirakawa, who had previously served in the central bank's New York office. -- AFP

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