(For more stories on Japan's Aug. 30 election click)
* Democrats could take 300 of 480 lower house seats - media
* Trend could change in final days ahead of Aug. 30 vote
* Ruling LDP could see seats halved from 300 before poll
By Linda Sieg
TOKYO, Aug 20 (Reuters) - Japan's opposition Democratic Party may be headed for a landslide election victory, trouncing the conservative party that has ruled for most of the past half-century, a leading newspaper said on Thursday.
The Democrats could win 300 of the 480 seats in parliament's lower house while the long-ruling Liberal Democrats may see their strength halved to around 150 seats, said the Asahi newspaper, based on a detailed survey of electoral districts ahead of the Aug. 30 poll.
But the paper also said around 30 to 40 percent of voters in its survey of electoral districts had not revealed how they would vote while 25 percent might change their minds, so results could shift significantly in the final days.
Opinion polls have consistently shown the Democrats well ahead of the business-friendly Liberal Democratic Party (LDP), raising the prospect the LDP -- whose once-mighty political machine has been weakened by social and economic changes -- will lose power for only the second time in its 54-year history
Democratic Party leader Yukio Hatoyama, now looking likely to become the next prime minister, has pledged to put more money into consumers' hands to revive the economy, hold off on raising the 5 percent sales tax for four years and adopt a diplomatic stance less subservient to top security ally the United States.
A solid Democratic Party victory would end a deadlock in parliament, where the party and its allies already control the less powerful upper chamber.
A clear result would cheer financial markets as it would smooth policy-making as Japan shakes off a recession.
"The best scenario for the stock market would be where the Democratic Party scores a landslide victory and sets up a strong government, sparking hopes that Japan might change," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co Ltd.
BIG SPENDING PLANS
The Nikkei average climbed from Wednesday's three-week closing low, although financial markets were more focused on a rebound in Chinese shares and a surge in crude oil prices than on the election outlook.
"Whether the Democrats win or the LDP wins, you're still likely to have an accommodative monetary policy and the deficit's still likely to grow due to stimulus plans," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
"On the other hand, if the Democrats do win and it becomes a situation like (U.S. President Barack) Obama and Congress, it could be good in terms of getting policies passed."
Some market participants worry, however, that ambitious Democrat spending plans would inflate already sky-high public debt and push up long-term interest rates.
The Asahi said its survey showed the LDP, which had 300 seats ahead of the election, could be halved in strength in the powerful lower house, while its junior partner the New Komeito party was likely to stay at somewhere around 31 seats.
"If this trend continues, I think the results will be close to the Asahi's prediction," said Keio University professor Yasunori Sone. "Maybe not 300 seats (for the Democrats) but around 270 ... It would be hard for the LDP to turn it around."
Experts note, however, that predictions are complicated by Japan's electoral system in which 300 lower house seats are from winner-take-all, single member districts and the rest from multiple-seat proportional representation blocks in which voters cast ballots for a party.
The Asahi's prediction, based on surveys of half of the 300 single-seat districts, broadly matches opinion polls showing the LDP in deep trouble nationally.
KOIZUMI RESIGNED TO CHANGE
The Democrats and two small allies won control of the upper house in 2007, enabling them to stall bills and creating a policy deadlock as Japan struggles with deep-seated problems due to its shrinking, ageing population and the global financial crisis.
Popular former leader Junichiro Koizumi led the LDP to a huge victory in 2005 on a platform pledging market-friendly reforms.
But the party's support slid as his two successors each quit after less than a year and incumbent Prime Minister Taro Aso came under fire for a series of gaffes and policy flip-flops.
Koizumi admitted the LDP faced a tough fight this time.
"Unless something big happens, it's possible that we'll see a change in government," Koizumi, who is retiring from parliament, was quoted by the Yomiuri newspaper as saying on Wednesday.
"It's not bad to be the opposition party from time to time."
Aso has been stressing the success of the LDP's economic stimulus packages in helping Japan weather the global financial crisis and attacking the Democrats as weak on security policy and irresponsible on financial issues.
But analysts said news on Monday that Japan's economy returned to growth in the second quarter would probably do little to rescue the LDP, even though the figures marked the end of the country's longest recession since World War Two. (Additional reporting by Elaine Lies, Aiko Hayashi and Chisa Fujioka; Editing by Jerry Norton)