TOKYO, Oct 21 (Reuters) - Japan's Nikkei share gauge

extended its record-breaking rally on Tuesday, climbing nearly

1.5%, as markets anticipated a parliamentary vote likely to

confirm fiscal dove Sanae Takaichi as the nation's next prime

minister.

The Nikkei 225 Index advanced 1.4% to 49,871.95 in

early trade, and is poised for a record close, if the current

momentum persists. The broader Topix gauge was up 0.7%,

while reaction in the Japanese government bond (JGB) market was

muted.

As she campaigned for and won the leadership of the ruling

Liberal Democratic Party, the so-called "Takaichi trade" emerged

that was bullish on equities and bearish for long-term bonds and

the yen. But her assent to the prime minister's seat was delayed

after long-time political partner Komeito split from the LDP's

coalition.

The Nikkei soared on Monday after the LDP secured a new

partner in the Japan Innovation Party, known as Ishin, to firm

up Takaichi's support in the Diet. The coalition will still be a

minority in government, which may limit the scope of their

fiscal plans, according to Mizuho Securities senior market

economist Yusuke Matsuo.

"We think the administration will be compelled to take a

pragmatic approach to economic policy and do not expect the

Takaichi trade to gain significant traction in the medium term,"

Matsuo wrote in a note.

A parliamentary vote to choose the premier is scheduled for

the afternoon, with Takaichi almost certain to prevail. Market

attention now turns to who may fill out her cabinet for signs of

how the new government will approach spending and debt

management.

Takaichi has finalised a plan to appoint former regional

revitalisation minister, Satsuki Katayama, as finance minister,

broadcaster FNN reported on Tuesday.

There were 181 advancers in the Nikkei index against 41

decliners. The largest gainers were video game maker DeNA ( DNACF )

, up 5.6%, followed by Tokyo bourse operator Japan

Exchange Group Inc ( OSCUF ), which advanced 5.4%.

The largest losers were Hitachi ( HTHIF ), down 1.1%,

followed by Tokyo Electric Power Company ( TKECF ), which edged

0.1% lower.

The benchmark 10-year JGB yield fell 0.5

basis point (bp) to 1.66%. The two-year yield

edged 0.5 bp lower to 0.94%, and the five-year yield

also dipped 0.5 bp to 1.235%.

The yen slid 0.2% to 151.08 to the U.S. dollar.