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Yoshihiko Noda, elected Tuesday as Japan’s sixth prime minister in five years, faces a host of daunting problems, from post-tsunami recovery and an ongoing nuclear crisis to reviving a limp economy and reining in the nation’s bloated debt.

The legislative vote was largely a formality as Noda was chosen head of the ruling Democratic Party of Japan on Monday. But the list of challenges he faces in his new job would make any politician’s head spin.

Beyond providing vision and a strategy for the enormous task of rebuilding the northeastern coast after March’s tsunami_ the worst catastrophe to hit Japan since World War II _ Noda must unify his fractious party and restore public trust amid widespread disappointment over the government’s handling of the disaster and persistent political infighting.

The former finance minister, Noda succeeds the unpopular Naoto Kan, who officially resigned earlier Tuesday with his Cabinet after a tumultuous 15 months in office, during which he was sometimes opposed by members of his own party.

Noda, 54, is a “moderate voice” in the party, Sheila Smith, a senior fellow at the Council on Foreign Relations in Washington, wrote in a comment. “He has a steady temperament and a reputation for fairness in a party where loyalties have been severely tested of late.”

His Cabinet selection _ which could be announced Wednesday _ will be eyed closely to see how he will spread positions among the ruling party’s various factions. In Monday’s party vote, which went to a run-off, Noda defeated a minister backed by powerful party kingpin Ichiro Ozawa, who is embroiled in a scandal. The result was seen by some as a victory over old-style backroom politics.

A fiscal conservative, Noda is respected for his economic credentials. He has been battling the yen’s recent surge, which hurts the country’s vital exporters, overseeing Japan’s intervention in the currency market earlier this month to weaken the yen.

He has also voiced support in the past for raising Japan’s 5 percent sales tax to reduce the nation’s national debt, twice the nation’s gross domestic product, although he has toned down that tax talk lately.

Given the pressing problems at home, Noda will likely focus on disaster reconstruction and other domestic matters.

But he could face trouble in his relationship with China over past comments about convicted wartime leaders revered at the Yasukuni Shrine in Tokyo, where the souls of all Japan’s war dead are enshrined. Earlier this month, Noda reiterated his claim that the wartime leaders had paid their debts and should no longer be seen as war criminals. He made similar comments in 2005.

Yasukuni visits by postwar politicians have often enraged Japan’s neighbors, who bore the brunt of Japan’s colonial aggression and are sensitive to any efforts by Japan to whitewash its past. He and the rest of Kan’s Cabinet chose not to visit the shrine this year.

China’s official news agency warned Noda on Monday to not to ignore Beijing’s “core interests” or seek to portray it as a threat to regional peace and stability. In a harshly worded editorial, Xinhua demanded Noda not visit Yasukuni and said Tokyo must recognize China’s claim over Japanese-controlled islands in the East China Sea known as Senkaku, or Diaoyutai in Chinese.

The two countries got into a spat last year when a Chinese fishing boat captain was arrested _ and later released _ by Japan after his boat sailed close to the islands.

Earlier this month, two Chinese patrol boats entered waters near the islands, prompting strong protests from Tokyo.

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Federal officials say flights are resuming with minimal delays at Washington-area airports, which took a glancing blow from Hurricane Irene.

New York-area airports remain closed as Irene passed over the nation’s busiest air-traffic region.

The longer that Kennedy, LaGuardia and Newark, N.J., airports remain shuttered, the worse it will be as travel delays ripple across the country. Federal officials said Sunday they didn’t know when the airports would reopen payday loans.

Airlines have already canceled thousands of flights for Sunday, but it was unclear how much havoc the storm would cause for travelers on Monday.

Weather officials downgraded Irene from a hurricane to a tropical storm Sunday as the storm’s winds lost speed.

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Stocks rallied Friday after Federal Reserve Chairman Ben Bernanke proposed no new measures to stimulate the weak U.S. economy, saying he

TD Economics has downgraded its forecast for global growth in a new report, issued Wednesday. Its economists warned that Canada could slip into recession if the U.S. economy continues to weaken.

Consumer confidence fell to its lowest level in two years, a decline that could have serious implications for spending and retail sales.

The downbeat mood spread even to Ontario Truckers, an industry that typically feels the first twitches of a downturn in the economy.

The Toronto Stock Exchange squeaked into positive territory amid the gloom

NATO says the situation in Tripoli is still “very serious and very dangerous.”

Spokesman Col. Roland Lavoie also told reporters Tuesday that pro-Gadhafi forces are severely degraded and losing strength through desertions and defections.

Spokeswoman Oana Lungescu says NATO may play a role in Libya in the post-Gadhafi period.

Earlier, France’s foreign minister earlier said he hopes NATO’s air operation over Libya will end “as soon as possible” _ once rebel fighters topple Gadhafi and his forces for good. Turkey’s foreign minister says air operations will continue until security in the country is fully restored.

Alain Juppe says France and Britain were responsible for about 75 to 80 percent of NATO air operations over Libya in recent months.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

BRUSSELS (AP) _ NATO says it will continue Libya operations and will bomb Moammar Gadhafi’s forces if they keep fighting.

Spokesman Col. Roland Lavoie also told reporters Tuesday that pro-Gadhafi forces are severely degraded and losing strength through desertions and defections.

Earlier, France’s foreign minister earlier said he hopes NATO’s air operation over Libya will end “as soon as possible” _ once rebel fighters topple Gadhafi and his forces for good.

Alain Juppe says France and Britain were responsible for about 75 to 80 percent of NATO air operations over Libya in recent months.

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Oil prices around the world should start falling if Libyan rebels succeed in toppling Moammar Gadhafi’s regime, though the full effect won’t be felt for months.

On Sunday night, rebel forces pushed into Tripoli without meeting much resistance, hours after they overran a major military base that defended the capital. The opposition’s leaders said Gadhafi’s son and one-time heir apparent, Seif al-Islam, has been arrested.

Independent analyst Andrew Lipow said oil markets will likely respond Monday by sending prices lower in “a sign of relief that conflict has come to the end.”

But Lipow said it will take time for the market to erase the hefty price increase that resulted from the suspension of Libyan oil exports since the rebellion began in February.

Libya used to export about 1.5 million barrels of oil per day, almost all of which have been cut off. Although Libyan oil amounted to less than 2 percent of world demand, its loss affected prices because of its high quality and suitability for European refineries.

Analysts estimate that the situation in Libya has increased oil prices by $10 to $20 a barrel.

The European refineries have struggled to make up for the production loss despite an increase from Saudi Arabia. As a result, European markets should see the first and most significant drops in oil prices, Lipow said.

He added that any developments in the ongoing European financial crisis could also move stock markets around the world this week and oil prices along with them.

Independent analyst Jim Ritterbusch said that even if rebels manage to push Gadhafi out soon, the near-term effects on oil prices will be limited.

“Psychologically anyway, it’s going to force some additional selling,” Ritterbusch said. “But selling may not be pronounced because there’s still a lot of question marks remaining” on how long it would take for production to resume.

Michael Lynch, president of Strategic Energy & Economic Research, said that once Gadhafi is pushed out, Libya’s new government could take the path of the Iraqis after the fall of Saddam Hussein and spend years fighting over every detail. Or it could follow Kuwait’s example and quickly decide to bring in an outside company to get production restarted right away

He added that there’s always a chance that the process could come to a halt if one of the rebel generals tries to seize power, or if different factions get caught up debating the country’s new constitution and put off making decisions about oil production.

“They do have a good cadre of educated people, but they don’t have a long record of competent self-government,” Lynch said. “It would not be a bad bet to think there might be a chaotic period for a few months till they get organized.”

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Official figures show that British government borrowed far less in July than it did in the same month a year ago.

The Office for National Statistics says Friday that public sector net borrowing, which excludes financial interventions such as bank bailouts, was 20 million pounds ($33 million), way down on last year’s equivalent 3.5 billion pounds ($5.8 billion). It was also much lower than the 2.5 billion pound ($4.1 billion) shortfall expected in markets.

The statistics office said the levy on banks’ balance sheets contributed some 660 million pounds ($1.1 billion) in July while public finances were also boosted by larger corporation tax receipts, sales taxes and lower spending by local government.

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Canada

Financial consultant Jose Jimenez has been on his own gut-wrenching roller coaster ride the last few weeks — and not because of the stock market fluctuations he monitors daily.

Jimenez, 35, has been trying to buy his first home.

“In a way, I’ve been rooting for the markets to tank a bit and hoping that might encourage other people not to buy right now, but that doesn’t seem to be the case,” says Jimenez, whose wife is expecting their second child.

In fact, whipsawing markets, fears of a double-dip recession and global economic uncertainty seem to have made housing look as good as gold.

Canadian home sales were up 12.3 per cent last month from July, 2010 and are expected to grow slightly the rest of this year because of low interest rates, the Canadian Real Estate Association said Tuesday.

“We anticipate that, going forward, the housing market in Canada is going to be an oasis of stability compared to what is expected to be further volatility in financial markets,” Gregory Klump, CREA’s chief economist, said in a telephone interview.

Almost 285,000 housing units have sold across Canada so far this year, just 1.6 per cent below sales for the same period last year, and that’s expected to hit 450,800 by the end of 2011, according to CREA forecasts.

That’s despite dire predictions earlier this year from some housing analysts that the real estate bubble is overdue to burst and send Toronto prices toppling by as much as 25 per cent.

Jimenez is keenly aware of all those numbers but has a few more pressing ones on his mind: His second child is due in September, his 2-year-old daughter Sadie will start school in a couple of years and Jimenez and his wife, Sydney Richardson, just want a house they can make a home.

Richardson is now worried the couple are “doomed” to have to raise their children in their two-bedroom Beach apartment after losing out Monday in a six-person bidding war — their second in just a few weeks — on a renovated three-bedroom Beach semi that was listed for $699,000.

The couple offered $703,000, only to be outdone by a so-called “bully bid” — a down-to-the-wire offer almost $100,000 over asking price payday loan.

Last month they were braced to offer $70,000 over the $550,000 asking price for a Rhyl Ave. house but found themselves up against 13 other potential buyers. The house sold for $120,000 over asking.

The couple has talked about putting things on hold until the real estate market calms down, but their biggest fear is that day will never come.

While Sonya Gulati, an economist at TD Economics, anticipates sales will be a little more subdued in the fall, she said first-time buyers and immigrants are still being drawn into the market by interest rates that are expected to remain low until 2013.

“On the one hand, they are incredibly brave given all the economic uncertainty out there,” says Gulati, “but you need a place to live and a house is a long-term purchase so people seem to think it makes sense despite the market gyrations.”

Real estate agent Dave Tsaparis says he’s seeing more and more home buyers, banking on low interest rates, taking on mortgages of $300,000 to $500,000.

Veteran Beach real estate agent Dianne Chaput blames lack of supply for many of the bidding wars, but expects that could ease in the fall as more baby boomers look to cash out on their biggest asset at peak market.

Domenic Polsoni is so confident real estate is a sure bet, he recently traded in his Milton home, and gave up one car to help finance the move to a more expensive house in the Dufferin St. and Sheppard Ave. area.

“People have been saying for years that the real estate bubble is going to burst, but I can’t imagine that will happen. We survived a major hit in 2008, people held their breath and then everything just seemed to march along.”

Jimenez fears getting caught up in the current real estate “panic.”

“But this is the neighbourhood where we want to raise our kids. Even if we were to take a short-term loss, I wouldn’t be too worried about it in the long run.

“I think we’d definitely get the value back from it, not just in the sale price, but in the life we will have had bringing up our family in that neighbourhood.”

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Foreign investors cut their holdings of U.S. Treasury debt in June for the first time in more than two years. The decline came at a time of anxiety about whether the United States would raise its borrowing limit.

China, the biggest buyer of U.S. Treasury debt, increased its investment for a third straight month. But Japan, the second-largest buyer, along with Brazil, Russia, Hong Kong, and a group that includes the Bahamas, Bermuda, the Netherlands and the Cayman Islands cut their investments.

Overall foreign holdings dropped 0.4 percent to $4.5 trillion. It was the first decline since April 2009.

Much of the decline was driven by private investors. Their net purchases of long-term U.S. Treasurys fell a record $18.3 billion in June. Net purchases are the difference between what investors buy and sell in one month.

The decline lowered private investors’ overall foreign holdings by $15.1 billion.

Overall foreign holdings of governments, which include central banks, dropped only $1.7 billion. Governments account for roughly 72 percent of total foreign holdings of U.S. Treasury debt.

Congress and the Obama administration reached a deal on Aug. 2 that would allow the U.S. government to increase its $14.3 trillion borrowing limit by more than $2 trillion. It was approved hours before the U.S. faced a potential default on its debt.

The full increase is dependent on lawmakers reaching agreement on an equal amount of cuts to the deficit over the next decade cash advance flexible payments. Up to $1.5 trillion of those cuts must be negotiated by a special committee of lawmakers over the next three months.

The total deficit cuts fell short of the $4 trillion in cuts that Standard & Poor’s said was needed to achieve a credible deficit-reduction plan. As a result, S&P downgraded the U.S. government’s credit rating from AAA to AA+.

Economists said investors likely worried about how the debate in Washington would be resolved, and those worries contributed to the overall decline. Many economists expect foreign holdings will drop further in July because the borrowing limit was not raised until August.

However, they predict foreign holdings will increase in August. Congress approved an increase in the borrowing limit, and Europe’s debt crisis has made U.S. Treasurys more seem like a safer bet, they said.

“Now people are saying they want to hold U.S. Treasuries. They don’t care what S&P said,” said Chris G. Christopher Jr., senior principal economist at IHS Global Insight. “They are saying they have nowhere else to put their money.”

In June, China increased its holdings 0.5 percent to $1.166 trillion.

Japan trimmed its holdings 0.2 percent to $911 billion. Britain, the third-largest foreign holder of Treasury securities, boosted its investment 0.8 percent to $349.5 billion.

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