(Adds analyst comment in paragraphs 4-5, updates prices) By Rocky Swift TOKYO, Oct 21 (Reuters) - Japan's Nikkei share gauge extended its record-breaking rally on Tuesday, climbing nearly 1.5%, as markets anticipated a parliamentary vote likely to confirm fiscal dove Sanae Takaichi as the nation's next prime minister. The Nikkei 225 Index advanced 1.4% to 49,871.95 in early trade, and is poised for a record close, if the current momentum persists. The broader Topix gauge was up 0.7%, while reaction in the Japanese government bond (JGB) market was muted. As she campaigned for and won the leadership of the ruling Liberal Democratic Party, the so-called "Takaichi trade" emerged that was bullish on equities and bearish for long-term bonds and the yen. But her assent to the prime minister's seat was delayed after long-time political partner Komeito split from the LDP's coalition. The Nikkei soared on Monday after the LDP secured a new partner in the Japan Innovation Party, known as Ishin, to firm up Takaichi's support in the Diet. The coalition will still be a minority in government, which may limit the scope of their fiscal plans, according to Mizuho Securities senior market economist Yusuke Matsuo. "We think the administration will be compelled to take a pragmatic approach to economic policy and do not expect the Takaichi trade to gain significant traction in the medium term," Matsuo wrote in a note. A parliamentary vote to choose the premier is scheduled for the afternoon, with Takaichi almost certain to prevail. Market attention now turns to who may fill out her cabinet for signs of how the new government will approach spending and debt management. Takaichi has finalised a plan to appoint former regional revitalisation minister, Satsuki Katayama, as finance minister, broadcaster FNN reported on Tuesday. There were 181 advancers in the Nikkei index against 41 decliners. The largest gainers were video game maker DeNA , up 5.6%, followed by Tokyo bourse operator Japan Exchange Group Inc, which advanced 5.4%. The largest losers were Hitachi, down 1.1%, followed by Tokyo Electric Power Company, which edged 0.1% lower. The benchmark 10-year JGB yield fell 0.5 basis point (bp) to 1.66%. The two-year yield edged 0.5 bp lower to 0.94%, and the five-year yield also dipped 0.5 bp to 1.235%. The yen slid 0.2% to 151.08 to the U.S. dollar. (Reporting by Rocky Swift in Tokyo; Editing by Sherry Jacob-Phillips) (The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)
