TOKYO (Reuters) - A Japanese court on Thursday acquitted ruling party heavyweight Ichiro Ozawa of charges of violating fund-raising law, further complicating Prime Minister Yoshihiko Noda's task of preserving party unity and pushing through his contentious tax hike plan.
If upheld, the Tokyo district court decision could help the 69-year old former party leader, who opposes Noda's plan to double the sales tax and leads the party's biggest faction, contest the scheme and challenge Noda's leadership.
But analysts said the threat of an early election may prevent Ozawa's backers from revolting against the prime minister, and that the fate of the tax bill rested primarily in the hands of the opposition which controls the parliament's upper house.
Still, bond investors will be watching Ozawa's next steps for any signs that increased infighting among the ruling Democrats could further delay budget reforms necessary to rein in Japan's snowballing debt.
(Reporting by Tetsushi Kajimoto and Kaori Kaneko; Editing by Joseph Radford)