TOKYO, March 13 (Reuters) - Japan's Space One's small,

solid-fuelled Kairos rocket exploded shortly after launch on its

inaugural trip on Wednesday as the firm tried to become the

first Japanese company to put a satellite in orbit.

The an 18 metre (59 ft), four-stage solid-fuel rocket

exploded seconds after lifting off just after 11:01 a.m. (0201

GMT), leaving behind a large loud of smoke and a fire near the

launch pad, visible on a local media livestream of the launch on

the tip of Kii peninsula in western Japan.

Kairos carried an experimental government satellite that can

temporarily replace intelligence satellites currently in orbit

if they fall offline.

There was no immediate indication of what caused the

explosion, or whether there were any injuries. Pads typically

have no people anywhere nearby during a launch.

Space One had initially planned the launch for Saturday but

postponed it after a ship entered the nearby restricted sea

area.

Although Japan is a relatively small player in the space

race, the nation's rocket developers are scrambling to build

cheaper vehicles to capture booming demand for satellite

launches from its government and from global clients.

Tokyo-based Space One was established in 2018 by a

consortium of Japanese companies: Canon Electronics ( CAOEF ),

the aerospace engineering unit of IHI, construction

firm Shimizu ( SHMUF ) and the state-backed Development Bank of

Japan. Two of Japan's biggest banks, Mitsubishi UFJ and

Mizuho, also own minority stakes.

Shares in Canon Electronics ( CAOEF ) fell more than 8% after

Wednesday's failed launch.

Space One wants to offer "space courier services" to

domestic and international clients, aiming to launch 20 rockets

a year by the late 2020s, its president Masakazu Toyoda said.

Although the company delayed Kairos' inaugural launch window

four times, it said orders for its second and third planned

trips have been filled, including by an overseas customer.

Space One does not disclose Kairos' launch costs, but

company executive Kozo Abe said it is "competitive enough"

against American rival Rocket Lab.

Rocket Lab has launched more than 40 Electron small rockets

from New Zealand since 2017 at roughly $7 million per flight.

Several Japanese companies have used Electron for their

missions, including radar satellite makers iQPS and

Synspective, and orbital debris-removal startup Astroscale.

Last month, state-funded Japan Aerospace Exploration Agency

(JAXA) successfully launched its new cost-efficient flagship

rocket, the H3. JAXA completed a historic "pinpoint" moon

landing this year, and the H3 is scheduled to carry about 20

satellites and probes to the space by 2030.

In 2019, Interstellar Technologies conducted Japan's first

privately developed rocket launch with its MOMO series, although

without a full-scale satellite payload.

Partnering with the United States, Japan is seeking to

revitalise its domestic aerospace industry to counter

technological and military rivalry from China and Russia.

The government last year promised "comprehensive" support

for space startups with technology critical for national

security, as it seeks to build satellite constellations to ramp

up intelligence capabilities.

Japan's defence ministry on Friday said it had struck a deal

with Space One to boost its rockets' payload by experimenting

with fuel-efficient methane engines.