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The government could reduce its stake in Japan Tobacco Inc. to a third from half to pay for reconstruction costs from the March earthquake and tsunami, a Democratic Party of Japan official said.

The state’s holdings in “JT could be sold down, I think, to a third from one-half,” Katsuya Okada, secretary general of the party, told a news conference Wednesday in Tokyo. “This is an issue that should be debated extensively.”

The ruling DPJ is considering ways to secure about ¥13 trillion more in funds that Prime Minister Naoto Kan’s government said is needed for rebuilding over the next five years.

Okada said the sale of government-held shares of Nippon Telegraph & Telephone Corp. and Tokyo Metro Co. should also be considered.

“My party is in the midst of discussing how much funds can be raised by selling government assets and reducing unneeded expenses,” said Okada.

Japan Tobacco favors the sale of the government’s stake so it can end constraints on management, Hideyuki Yamamoto, a company spokesman, said on July 28. JT, the world’s third-largest publicly traded cigarette maker by volume, makes Mild Seven and Camel cigarettes.

The Children’s Investment Fund Management UK LLP, the London hedge fund founded by Christopher Cooper-Hohn, in June called on the Japanese government to amend the law requiring it to hold a majority in Japan Tobacco, and reduce its holding.

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