The LDP, headed by Japan's next prime minister Shinzo Abe, won a landslide victory on Sunday, fuelling speculation that the new coalition government would take a softer stance on nuclear power. Public opinion remains divided on the role of atomic energy after natural disasters last year triggered a radiation crisis at the Fukushima Daiichi plant.

Shares of Japanese utilities surged on Monday, with the operator of the Fukushima plant Tokyo Electric Power Co Inc (9501.T) jumping 32.9 percent. Tokyo's benchmark average .N225 gained 0.9 percent.

"Japan must grow economically and energy policy plays a large role in that," Hideaki Omiya, chief executive of atomic reactor builder Mitsubishi Heavy, said in an interview on Monday. But "safety comes first, and so (reactor) makers must do all we can do to say 'if we do this it's safe.'"

In July, Kansai Electric Power Co (9503.T) resumed two of Japan's 50 commercial reactors after clearing provisional safety standards drawn up by the government. The decision to restart the units sparked a wave of protests.

No additional reactors are expected to be brought on-line until the summer of 2013 at the earliest as a new nuclear regulator is yet to compile fresh safety requirements for restarting them after the Fukushima crisis.

Mitsubishi Heavy makes pressurized water reactors (PWR), which make up the majority of existing nuclear reactors around the world. The firm's power systems division accounted for more than 30 percent of its overall sales last year. The company also builds ships and produces industrial machinery.

DEFENCE BUDGET

Mitsubishi Heavy, which expects to log 3 trillion yen ($35.9 billion) in sales for the fiscal year ending March, is also a major defense contractor and could benefit from increased military spending under Abe.

Abe, who served as prime minister for under a year before resigning in September 2007, is seeking a stronger global security role for Japan in the region. He has also been talking tough in a spat with China over uninhabited isles in the East China Sea, known as Senkaku in Japan and Diaoyu in China.

"It is not clear yet how much the defense budget will rise under the new government, but I do expect a little increase in our (defense-related) business," Omiya said, adding however that heightened tensions with foreign powers would not benefit Japan.

In the arena of commerce, Japan Inc has struggled against rising stars from South Korea and China while facing shrinking market at home.

Toshiba Corp (6502.T) said on Monday that the LDP should take action to stabilize the yen against foreign currencies and draw up an energy policy to stem the rise of electricity costs.

Omiya, who is also one of the vice chairmen of the Keidanren, a influential business lobby, said the strong yen was a major drag for export-reliant manufacturers in Japan, and that politicians should take strong measures to combat the economic malaise. ($1 = 83.5000 Japanese yen)

(Additional reporting by Maki Shiraki and Kentaro Sugiyama; Editing by Ryan Woo)

• A Permanent Economic Emergency