TOKYO, JAPAN - THE leader of Japan's biggest opposition party signalled on Sunday that acting Bank of Japan Governor Masaaki Shirakawa would likely win parliament's approval to take the job permanently if nominated by the government.

But Democratic Party leader Ichiro Ozawa added that many in his party would object to Hiroshi Watanabe, a former vice finance minister for international affairs, as deputy governor on the grounds that the BOJ posts should not be sinecures for finance ministry bureaucrats.

Prime Minister Yasuo Fukuda's government, keen to find a new central bank chief before a G7 finance meeting later this week, has suggested Mr Shirakawa for the top job and floated Watanabe for the deputy post in informal talks with the Democrats, political sources said on Friday.

Mr Fukuda, his popularity ratings sagging as he struggles to cope with a divided parliament, is under pressure to find a replacement for former governor Toshihiko Fukui, who retired two weeks ago, leaving the central bank without a permanent head for the first time in 80 years.

The Democrats have rejected two previous nominees for governor on grounds that their careers in the finance ministry would threaten the BOJ's independence in monetary policy.

They also object to the custom of alternating top BOJ posts between central bankers and finance ministry bureaucrats, an example of the practice of 'amakudari", or 'descent from heaven", whereby bureaucrats parachute into cushy jobs after retiring.

Mr Ozawa said the problem of 'amakudari' did not apply to Shirakawa, a career central banker who has shrugged off any label of hawk or dove and said only that his views were not that different to those of the BOJ before his appointment as deputy.

'Setting aside an evaluation of (Shirakawa) personally, that obstacle does not exist,' Mr Ozawa told private broadcaster Fuji TV.

But asked about Mr Watanabe, he said: 'The opinion that it is not desirable for this post to take the form of 'amakudari' is held by many in the party.'

The vacuum at the top of the BOJ comes amid coordinated central bank action to settle gyrating financial markets, and as US Federal Reserve Chairman Ben Bernanke has conceded for the first time that the US economy may slip into recession.

The Fed has slashed US interest rates by 3 percentage points to 2.25 per cent since mid-September to limit the fallout from the subprime mortgage crisis, and markets expect another cut this month.

A third veto of a nominee for governor would be a harsh blow for the 71-year-old Mr Fukuda, who is already struggling to keep his job, although analysts say the Democrats could also suffer a public backlash if they are seen to be too obstructive