Japanese opposition parties have agreed to return to parliament, ending an 11-day boycott that had stalled debate on a new budget.

Normal business is expected to resume on Wednesday.

The opposition Communist and Social Democratic parties joined the Democratic Party in agreeing to return to parliament after the ruling coalition offered opposition parties greater input in deciding the timetable for the parliament. They will also have more opportunities to question Prime Minister Keizo Obuchi.

"I am delighted," Mr Obuchi told Japanese reporters. "If they appear [in parliament to ask questions] I will answer."

Budget debate

The agreement also guarantees ample time for debate on key issues such as the budget for the financial year beginning on 1 April.

Timely passage of the huge 85 trillion yen ($784.7bn) budget is seen as crucial to achieve a sustained economic recovery from Japan's worst postwar recession.

Finance Minister Kiichi Miyazawa moved to soothe concerns about Japan's slip back into technical recession in the second half of 1999, insisting recovery was still on track.

But the dollar rose to a five-month high of 109.38 yen on Tuesday morning.

"The dollar is soon likely to test the 110 yen barrier in the near term due to growing doubt about the progress in Japan's economic recovery," said a senior dealer at a European bank.

Elections

The boycott was triggered by the government's decision to use its majority to force a bill through parliament reducing the number of deputies in the lower house by 40.

The opposition says the cut favours bigger parties, such as Mr Obuchi's Liberal Democratic Party.

The opposition decision to accept the government's compromise was based on fears that the stand-off could prompt voters to blame it for delaying passage of the budget and jeopardising economic recovery, analysts said.

Elections must be held by October, and many observers believe that holding general elections in April, just after the budget is passed, would work to the government's advantage by showing it is making efforts to improve the flagging economy.