Japan's incoming PM Ishiba fills cabinet posts ahead of likely election

That poll, which will decide which party controls parliament's powerful lower house, will come on Oct 27, the Kyodo news agency reported, without citing sources.

"Ishiba seems to be preparing for the earliest possible election schedule, with a dissolution on October 9 and voting on October 27," said Shigenobu Tamura, a former official at Ishiba's Liberal Democratic Party and now political analyst.

Among Ishiba's key picks so far are two rival candidates in the leadership race, Katsunobu Kato as finance minister and Yoshimasa Hayashi to stay on as chief cabinet secretary, a pivotal post that includes the role of top government spokesman, two sources familiar with the appointments earlier told Reuters.

Japanese shares fell more than 4% in early trading on Monday as the yen strengthened and Japanese government bonds jumped in reaction to the leadership victory by Ishiba, who is seen as a monetary policy hawk.

A close Ishiba ally, Takeshi Iwaya, a former defence chief, will take over as foreign minister, while Gen Nakatani will return to the defence ministry, a position he held in 2016, the sources, who asked not to be identified because they are not authorized to speak to the media said, confirming earlier media reports. Yoji Muto, a former junior minister, will take charge at the economy, trade and industry ministry, a separate source said.

Absent, however, from picks so far reported in local media is Sanae Takaichi, the hardline conservative he beat by 215 votes to 194 on Friday in the closest leadership election in almost seven decades.

Takaichi's exclusion could make it difficult for Ishiba to manage a fractious ruling group roiled by scandals that have sapped its public support.

Media reports that Takaichi has declined a post "could point to a weakness in Ishiba's support base, which could cause him problems going forward," said Hiroshi Shiratori, a political science professor at Hosei University in Tokyo.

In a televised interview on Sunday, Ishiba, did not discuss his cabinet appointments, but suggested he may call a general election in October. A poll must be held within the next 13 months.

Another rival, Shinjiro Koizumi, who has called for a snap election, will be his election campaign chief, according to a local media report. Former Prime Minister Yoshihide Suga, who backed Koizumi, will be his party vice president, the sources said.

Ishiba, 67, won the LDP leadership race on his fifth attempt with strong backing from rank-and-file members.

He is however, considered something of trouble-maker by many of his parliamentary colleagues for often defying party policy. On Friday before his run off election against Takaichi he apologised to LDP lawmakers for his "shortcomings".