Shigeru Ishiba denied he had decided to quit after a source and media reports said he planned to announce his resignation to take responsibility for a bruising upper house election defeat.

As rumours swirl of Shigeru Ishiba’s resignation, a leadership contest now looms that risks tearing the Liberal Democratic Party apart.

The reports come after Trump announced a trade deal with Japan, and days after Ishiba's governing coalition lost its majority in the country's upper house.

The embattled prime minister said he would remain in office to oversee tariff talks with the United States and other pressing matters.

Embattled Japanese Prime Minister Shigeru Ishiba is facing speculation that his days are numbered after facing a historic defeat in the upper house election on Sunday.

Mr Ishiba, who has faced mounting criticism from within his Liberal Democratic Party (LDP) after his coalition lost its majority in Sunday’s upper house election, has reportedly informed close aides of his intention to resign.

Japan's embattled prime minister Shigeru Ishiba, fresh off a crushing defeat in upper house elections over the weekend, will not be in a position of strength to negotiate a favorable trade deal with the U.S., analysts said.

World markets are mixed after U.S. stock indexes hit new records. Oil prices fell and U.S. futures were little changed.