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TOKYO, July 2 (Reuters) - Prime Minister Shinzo Abe's Liberal Democratic Party was on track for a stinging defeat in an election in the Japanese capital on Sunday, exit polls showed, signaling trouble for the Japanese leader, who has suffered from slumping support because of a scandal over suspected favoritism for a friend's business.
On the surface, the Tokyo Metropolitan assembly election is a referendum on Governor Yuriko Koike's year in office, but a poor showing for Abe's party will also be taken as rebuke of his 4-1/2-year-old administration.
Public broadcaster NHK said Koike's Tokyo Citizens First party and its allies were on track for between 73 to 85 seats in the 127-seat assembly. The LDP was forecast to take between 13 and 39, down from 57 before the poll and possibly its worst showing ever.
"I am very happy that I got everyone's understanding," a smiling Koike said in televised remarks after the exit polls were released. NHK said her own new party was set to win 48 to 50 seats.
Past Tokyo elections have been bellwethers for national trends. A 2009 Tokyo poll in which the LDP won just 38 seats was followed by its defeat in a general election that year, although this time no lower house poll need be held until late 2018.
Koike, a media-savvy ex-defense minister and former LDP member pushing a reformist message, was aiming for her Tokyo Citizens First party and allies to win a majority in the assembly, to end the LDP's domination of the chamber.
Among her allies is the Komeito party, the LDP's national coalition partner.
The strong showing by Koike's party will fuel speculation that she will make a bid for the nation's top job, though that may not be until after the 2020 Tokyo Olympics.
It could also widen cracks between the LDP and the Komeito while damaging prospects for the opposition Democratic Party.
Abe's rivals in his party could be encouraged by the LDP's dismal performance to challenge him in a leadership race in September 2018, victory in which would set Abe on course to become Japan's longest-serving leader and bolster his hopes of revising the post-war, pacifist constitution.
Gerry Curtis, professor emeritus at Columbia University, speaking before the results, said Japans political landscape could be set for a shake-up if Koikes party and its allies win big.
"We may discover that Japan is not all that different from Britain, France, and the U.S. in its ability to produce a big political surprise," he said, referring to recent elections in those countries.
Abe's troubles center on concern he may have intervened to help Kake Gakuen (Kake Educational Institution), whose director, Kotaro Kake, is a friend, win approval for a veterinary school in a special economic zone.
The government has not granted such an approval in decades due to a perceived glut of veterinarians. Abe and his aides have denied doing Kake any favors.
Potentially more troublesome is the impression among many voters that Abe and his inner circle have grown arrogant. (Reporting by Linda Sieg; Editing by Marguerita Choy and Mark Potter)