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Japan to hike mid-term defense spending by 5 pct - Nikkei

Dec 13 (Reuters) - Japan, led by hawkish Prime Minister Shinzo Abe, will raise its defense spending over the next five years by about 5 percent to 24.6 trillion yen ($239 billion) to respond to China's growing military budget, the Nikkei financial daily reported.

Defense Minister Itsunori Odonera and Finance Minister Taro Aso reached a compromise on Thursday to free up funds, the Nikkei reported, citing people familiar with the matter.

The defense ministry had sought 24.9 trillion yen but faced resistance from the finance ministry, the paper said, adding that the cabinet was expected to approve the plan on Tuesday.

Japan's plan to spend more on defense comes as tensions with China have risen over tiny islands in the East China Sea - known as the Senkaku in Japan and the Diaoyu in China.

The spending plan includes an additional purchase of F-35 fighters, made by Lockheed Martin Corp, as well as two more Aegis warships, bringing the total to eight.

Japan is also buying the tilt-rotor Osprey surveillance aircraft, built by Boeing Co and Textron Inc's Bell Helicopter unit, and drones including Northrop Grumman Corp's Global Hawk.

Beijing recently announced a new airspace defense zone that includes the skies over the long-disputed islands, raising the ire of its neighbors and the United States.

Japan's new defense program is an update of a defense posture last reviewed in 2010 under the now-opposition Democratic Party of Japan.