Sanae Takaichi has come out top in a male-dominated race to lead Japan's ruling party, putting her on course to emulate her hero, former British leader Margaret Thatcher, and become her country's first female prime minister.

The fiscal dove's surprise victory might jolt investor confidence in one of the world's most indebted economies, while her nationalistic positions could stoke friction with powerful neighbour China, political analysts say.

She has also raised the possibility of redoing an investment deal with the US that reduced President Donald Trump's punishing tariffs on Japanese goods.

Having lost a run-off against Shigeru Ishiba to lead the Liberal Democratic Party in 2024, Takaichi, 64, will now seek approval from parliament to replace him as prime minister.

That is expected

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