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Japanese Prime Minister Kiichi Miyazawa is under heavy attack following his party's second by-election defeat in a month.

In northern Japan's Miyagi prefecture, Koki Hagino, candidate of an opposition coalition, narrowly defeated the ruling party's Nobuo Onodera Sunday in a hotly contested race for a vacated upper house seat.Ruling and opposition party leaders alike viewed the Miyagi vote poll as a test of public mood ahead of nationwide upper house elections in July.

"Voters were very severe in passing their judgement on (ruling party) politics," said a dejected-looking Tamisuke Watanuki, secretary-general of the ruling Liberal Democratic Party (LDP).

"We will do our best to restore public trust in the party (before the July polls)," he said in a televised news conference.

Business leaders led the attack on Miyazawa's government, linked to a rash of scandals since its inauguration four months ago.

"Another by-election defeat close on the heels of the one in Nara (last month) is a clear sign that public outrage is growing," Takeshi Nagano, chairman of the Japan Federation of Employers' Associations, said in a televised report.

Rokuro Ishikawa, chairman of the Japan Chamber of Commerce, warned the LDP that it could face a repeat of 1989 when voters rebelled against a ruling party tainted by the Recruit stock-peddling scam.

"If the trend continues, then the LDP could lose the upper house elections again this year," he said.

Although Hagino won by a slim margin of some 3,000 votes out of nearly 800,000 cast, his victory was significant in light of the LDP's huge offensive in a traditionally conservative region.

Meanwhile, Japan's newly appointed ambassador to the United States, Takakazu Kuriyama, called Monday for an end to "mutual recrimination and bashing" that have plagued U.S.-Japan relations in recent months.

"We must manage our bilateral relations in such a way that they are protected from the corrosive effects of certain `ugliness,' " Kuriyama told a group of American and Japanese businessmen, referring to an expression President Bush used following a recent spate of angry rhetoric that crossed the Pacific.