By Ju-min Park and Kiyoshi Takenaka

TOKYO, Nov 1 (Reuters) - A right-wing Japanese party with astronghold in the western city of Osaka surprisingly emerged asthe third-largest in Sunday's election, capitalising on somediscontent with the central government and the left-wingopposition.

Prime Minister Fumio Kishida's ruling Liberal DemocraticParty (LDP) defied expectations and held its strong majority inthe lower house poll, solidifying his position https://www.reuters.com/world/asia-pacific/japan-pm-kishida-surprises-with-comfortable-election-win-2021-11-01 in a fractious party and allowing him to ramp up economicstimulus. urn:newsml:reuters.com:*:nL1N2RS04O

But the left-leaning opposition Constitutional DemocraticParty of Japan (CDPJ) lost some seats although it remained thesecond-biggest party in the house.

The conservative Japan Innovation Party (JIP), which almostquadrupled its haul to 41 seats in the 465-seat legislature,ended up the election's biggest winner, overtaking even theKomeito party, the LDP's coalition partner.

The right-wing JIP has been seen as a possible ally for theLDP's push to revise the constitution. But it has also calledfor deregulation, tax cuts and decentralisation of authority tohelp trigger growth

"They took a more critical stance towards the centralgovernment, and managed to extract votes from those hesitantabout it, but not pleased with the main opposition," said CoreyWallace, a Japanese politics expert at Kanagawa University.

One reason for the JIP's success was the party's young No.2, Osaka governor Hirofumi Yoshimura, and his social media reachcombined with frequent appearances during the COVID-19 pandemic,when traditional campaigns had been limited, said HoseiUniversity professor Hiroshi Shiratori.

Unlike many other Japanese mainstream politicians, the46-year-old who has 1.2 million followers on Twitter, speaks offthe cuff, and often makes impassioned television pleas to thepublic to comply with pandemic-related restrictions.

SECURITY, CASINOS AND CAPITALISM

Yoichiro Sato, a professor of international relations atRitsumeikan Asia Pacific University, said the JIP favoured smallgovernment and could "block Kishida's new capitalism idea ofnarrowing the rich-poor income gap" even further.

However, like the LDP, the JIP favours the revision of thepost-war constitution and allowing for the defence budget to goabove the informal ceiling of 1% of the GDP. The LDP for thefirst time called for raising defence spending to 2% in itsmanifesto.

"If they join hands in promoting policy to bolster defence,there will be little CDPJ or the Japanese Communist Party cando," said Mikitaka Masuyama, professor at the National GraduateInstitute for Policy Studies.

A stronger JIP could also put more focus on Japan's drive tobuild casinos. The party supports the effort and Osaka inSeptember picked MGM Resorts International MGM.N and partnerOrix Corp 8591.T to build what could be Japan's first casino.

Wallace said that Osaka residents are "not as stronglyopposed to casinos," as in other potential sites like Yokohama,adding that JIP's win "despite support for a casino being one oftheir clearer and more committed positions suggests there is adecent chance of casino supporters eventually prevailing."

Ichiro Matsui, the mayor of Osaka who leads the party, saidafter the election that the group will stay in opposition andkeep the Kishida administration in check by "saying what's rightis right and what's wrong is wrong."

(Reporting by Ju-min Park, Kiyoshi Takenaka; additionalreporting by Yoshifumi Takemoto; Editing by Antoni Slodkowskiand Raju Gopalakrishnan) ((ju-min.park@thomsonreuters.com; Reuters Messaging:ju-min.park.thomsonreuters.com@reuters.net))