Japan's Fukuda Unveils Stimulus as His Support Crumbles

TOKYO - Prime Minister Yasuo Fukuda unveiled a $107 billion stimulus package to cushion Japan against soaring fuel and food prices, a move widely read as an attempt to save his embattled government ahead of a possible snap election.

Japan's economy, the world's second-largest, shrank in the second quarter as exports softened and consumers squeezed by inflation cut spending. The government has stopped short of declaring a recession, but the mood has darkened.

Fukuda's approval ratings have slid below 30 percent, and the opposition Democratic Party — which controls the upper house — is pressing for a general election it believes it can win.

The package includes payments to households, help for small businesses and subsidies to offset fuel costs for fishermen and farmers, among the groups hardest hit by this year's commodity surge.

A change of government would be historic: the Liberal Democratic Party has ruled Japan almost without interruption since 1955. But Fukuda is the LDP's second leader in two years, after Shinzo Abe's abrupt resignation last September.

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Associated Press writers contributed to this report.

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