Japan's Komeito Party Withdraws From Ruling Coalition

By Megumi Fujikawa

TOKYO--A major political ally of Japan's ruling Liberal Democratic Party has exited the governing coalition, ending a 26-year-long relationship in a move that could fuel political instability.

"There was a disagreement over the basic stance," regarding political funding issues that caused election losses, Komeito leader Tetsuo Saito said at a news conference Friday.

"Public trust in politics has been severely damaged," Saito said.

He said the party wouldn't support Sanae Takaichi, who was recently selected as the LDP's leader, as the nation's prime minister. Takaichi needs to gain approval in parliament to become the new premier.

The yen briefly strengthened to as high as 152.41 against the dollar before trading 0.2% higher at 152.78, FactSet data show.

• Ronnie Harui contributed to this report

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com