TOKYO -- In a stunning move that boosted hopes of a bank clean-up, Japanese Prime Minister Junichiro Koizumi on Monday tapped his pro-reform Economics Minister, Heizo Takenaka, to take over as top financial regulator.

Takenaka takes over the financial service portfolio from Hakuo Yanagisawa, who had been widely seen as an obstacle to adopting aggressive action to clean up Japan's ailing banks, Reuters reported.

Takenaka had clashed with Yanagisawa over the latter's opposition to a controversial infusion of public funds to help banks clean up the massive bad loans that have cluttered their balance sheets for more than a decade, stalling economic growth.

Speaking after his appointment was announced, Takenaka took a somewhat cautious line.

"A public fund injection would not be a target in itself but one possible result," he told a brief news conference.

"I would like to look at all available options and think of the best way," said Takenaka, who retains his current post as economics minister.

News of Takenaka's appointment sparked a rebound in Tokyo share prices, bolstered the yen and prompted a fall in government bond prices as investors bet bolder reform might now materialize.

"I think that (Takenaka's appointment) is excellent news for the (equities) market. Of all the cabinet people, Takenaka has the most aggressive policy on sorting out the banks' problems," said Garry Evans, a strategist at HSBC Securities in Tokyo.

Koizumi also reappointed octogenarian Finance Minister Masajuro Shiokawa, who has come out in favor of public fund injections if needed to help banks maintain adequate capital as they write off bad loans.

Taxpayers' Cash? Speculation that Yanagisawa would be replaced had been followed by talk of a compromise that would let him stay, so the decision to put Takenaka in his place was a bolt from the blue.

"I think it's a complete victory for reformers," said Fiachra MacCana, had of research at West LB Securities in Tokyo. "I couldn't be happier, both about the resignation of Yanagisawa, but also, most importantly, that he has been replaced with a clear reformer."

Others, though, remained to be convinced that Takenaka, an academic with now firm political base, could match his bold proposals with action.

"It shows Koizumi has a strong will to make changes or to take more proactive action," said Naoko Nemoto, banking sector analyst at Standard & Poor's International Credit Rating Agency.

But she added: "I have some concern about (Takenaka's) leadership, his real ability to make changes.

"He's not at all supported by the financial community or businessmen, so it's very challenging," Nemoto said.