Tokyo, July 13, 2010: Japan’s prime minister will seek cooperation with two swing-vote opposition parties on a policy-by-policy basis, a report said on Tuesday, as he faces political deadlock that could harm Japan’s credit rating.

Prime Minister Naoto Kan’s ruling coalition suffered a major blow in Sunday’s upper house election, putting his policies to deal with the country’s massive debt at risk and prompting a warning by credit rating agency Standard & Poor’s that it could cut Japan’s sovereign ratings.

Kan’s Democratic Party still control the powerful lower house. But it needs help from other parties to push bills through the upper chamber as they struggle to end decades of stagnation in the world’s No.2 economy and curb debt.

Kan, who took over from his unpopular predecessor just last month, said early on Monday that the Democrats would ask opposition parties to cooperate on a policy-by-policy basis rather than invite them into a formal coalition right away.

The Yomiuri newspaper, without citing sources, said on Tuesday the premier told people close to him that he would seek such cooperation from the New Komeito and pro-reform Your Party, and keep in mind the future option of seeking a formal coalition.