* Ruling bloc win would end parliamentary deadlock

  * PM Abe victory sets stage for stable government

  * Concerns simmer over Abe's post-election policy priorities (Adds NHK on final seat count, paragraph 3, participation rate, paragraph 11)

  By Linda Sieg

  TOKYO, July 22 (Reuters) - Japanese Prime Minister Shinzo Abe's ruling coalition scored a decisive victory in an election on Sunday - so big that there are suspicions he will lose interest in difficult economic reforms and pursue his nationalist agenda instead.

  The victory in the vote for parliament's upper house gives Abe a stronger mandate for his prescription for reviving the stagnant economy. Coincidentally, it could also give lawmakers in his own party, some of whom have little appetite for painful but vital reforms, more clout to resist change.

  Public broadcaster NHK said early on Monday Abe's Liberal Democratic Party (LDP) and its coalition partner, the New Komeito party, had won 76 of the 121 seats up for grabs in the 242-seat upper house.

  With the coalition's uncontested 59 seats, that ensures it a comfortable majority, tightening Abe's grip on power and raising the chances of a long-term Japanese leader for the first time since the reformist Junichiro Koizumi's rare five-year term ended in 2006.

  It also ends a parliamentary deadlock that began in 2007 when Abe, then in his first term as premier, led the LDP to a humiliating upper house defeat that later forced him to resign. The LDP fell short of a majority on its own on Sunday.

  Abe, who returned to power after his coalition's big win in a December lower house poll, repeated on Sunday that he would focus on fixing the world's third-biggest economy with his " Abenomics" mix of hyper-easy monetary policy, fiscal spending and a growth strategy including reforms such as deregulation.

  " We've argued that our economic policies aren't mistaken, and the public gave us their support. People now want to feel the benefits. The economy indeed is improving," a weary but confident-sounding Abe said at LDP headquarters late on Sunday after his ruling coalition's victory was assured.

  " We'd like to do our best to generate a positive cycle - in which job conditions improve and wages rise, boosting personal consumption and prompting companies to invest more - as soon as possible," he said.

  But some, including Japanese businesses with a big stake in the matter, worry the hawkish leader will shift to focus on the conservative agenda that has long been central to his ideology.

  That agenda includes revising the post-war pacifist constitution, strengthening Japan's defence posture and recasting Tokyo's wartime history with a less apologetic tone.

  Despite the hefty win, the strength of Abe's mandate was diluted by low voter turnout. Media reported turnout was 52.61 percent, more than 5 percentage points below the turnout in the last upper house poll in 2010. That could keep up pressure to stay focused on the economy.

  " THREE FACES"

  For now, many experts suggest, Abe is unlikely to turn his back on economic matters as he tries to beef up his so-far disappointing economic reform plans. He also confronts a decision on whether to go ahead with raising the 5 percent sales tax to 8 percent next April, part of a planned doubling by October 2015 aimed at reining in Japan's massive public debt.

  " My understanding is that Abe-san has three faces: Abe as right-wing, Abe as a pragmatist, Abe as the economic reformer," said Shinichi Kitaoka, president of the International University of Japan. " He has been showing the third face so far and will try to do the same after the election."

  Still, Abe is moving toward security policy changes that mark a big shift in a country that has prided itself on pacifist ideals even as it built up a military bigger than Britain's.

  Among those changes are an expected reinterpretation of the constitution to end a self-imposed ban on exercising the right of collective self-defence, or aiding an ally under attack, such as if an unpredictable North Korea launched a missile attack on security ally the United States.

  Another is a review of defence policies that include a consideration of acquiring the capability to attack enemy bases when an attack is imminent and no other options exist, and creation of a Marines division to protect remote islands such as those at the core of a heated territorial row with China.

  One clue to how Abe intends to proceed on the touchy topic of wartime history will be whether he visits the Yasukuni Shrine for war dead, where Japanese leaders convicted as war criminals by an Allied tribunal are also honoured, on the emotive Aug. 15 anniversary of Japan's defeat in World War Two.

  A pilgrimage to the shrine would outrage China, where bitter memories of Japan's past militarism run deep, and upset Washington, which fears a further fraying of Tokyo's already fraught relations with its neighbours.

  " The first Abe really wishes to go (to Yasukuni on Aug. 15) but I guess he will refrain from that," Kitaoka said.

  But he added: " Mr. Abe is somewhat unpredictable."

  Abe moved quickly to improve ties with China and South Korea at the start of his first 2006-2007 term but it is unclear whether he will repeat that success in his second. He has taken a tough stance toward Beijing in particular this time.

  Ties with China and Japan have been seriously strained by territorial rows and feuds over wartime history. Concerns are simmering about the risk of an unintended clash near disputed isles in the East China Sea where Japanese and Chinese vessels have been playing a cat-and-mouse game for months.

  " In that environment, something could go wrong," said Michael Green, Japan Chair at the Washington-based Center for Strategic and International Studies. " That's the Black Swan."

  Abe is also unlikely to abandon his long-term goal of revising the 1947 constitution, drafted by U.S. occupation forces after Japan's defeat and never altered since.

  Conservatives see the constitution as not only restricting Japan's right to defend itself but as responsible for eroding traditional mores such as duty to the state.

  Abe said on Sunday more debate was needed to win public understanding on constitutional reform. " I would like to deepen proper debate in a calm and stable situation," he said.

  The LDP and smaller parties that also favour revising the constitution failed to obtain a two-thirds majority in the upper house. They have this in the lower chamber, but two-thirds approval of both houses is required before a revision can be taken to a public referendum - a requirement Abe has said should be eased.

  Coalition partner New Komeito is cautious about changing the charter's signature war-renouncing Article 9 which, if taken literally, bans maintenance of armed forces.

  Sunday's election also left many wondering about the future of a competitive two-party democracy in Japan. The opposition Democratic Party of Japan, which surged to power in 2009 only to be ousted last year, suffered its worst drubbing since its founding in 1998. (Additional reporting by Leika Kihara Editing by Mark Bendeich and Paul Tait)