Exit polls suggest a major loss for the Liberal Democratic Party in parliamentary elections, but Prime Minister Shigeru Ishiba is vowing to stay on.

Japan's upper house election on Sunday dealt a big blow to the ruling coalition and sets markets up for possible policy paralysis and a bigger fiscal deficit, much of which is already priced in, analysts said.

Prime Minister Shigeru Ishiba remains opposed to a consumption tax cut, but opposition parties are expected to intensify calls for such measures after gaining more seats in Sunday's House of Councillors election.

The LDP’s election loss would be another blow to Prime Minister Shigeru Ishiba, who has been struggling to close a trade deal with the Trump administration.

By Tim Kelly TOKYO (Reuters) -Japanese voters headed to the polls on Sunday in a tightly contested upper house election that could unleash political turmoil, with rising prices and immigration concerns threatening to weaken Prime Minister Shigeru Ishiba's grip on power.

Japanese Prime Minister Shigeru Ishiba’s political standing took a major hit on Sunday as his coalition lost its hold on the upper house of parliament, according to projections by Japanese media outlets Nippon TV and TBS.

Japan’s Prime Minister Shigeru Ishiba faces a critical test in Sunday’s upper house election. A loss could deepen political instability as his government struggles with rising prices, U.S. tariffs and voter dissatisfaction.

Japanese were voting Sunday for seats in the smaller of Japan's two parliamentary houses in a key election with Prime Minister Shigeru Ishiba and his ruling coalition facing a possible defeat that could worsen the country's political instability.

Japanese voters are participating in a crucial upper house election that could determine the fate of Prime Minister Shigeru Ishiba's leadership amidst rising inflation and trade tensions with the US.