(Adds reporting credit)
* Gay sex legal in Japan since 1880, but still socially taboo
* LGBT rights not covered in equality or anti-discrimination laws
* Conservative LDP manifesto mentions LGBT rights for first time
* Some local governments, companies recognise same-sex couples
By Elaine Lies
TOKYO, July 7 (Reuters) - When openly gay independent candidate Wataru Ishizaka campaigned for a 2007 Tokyo local election, people snickered at his speeches, but now even Japan's conservative ruling party mentions gay rights in its platform for this year's upper house election.
Though the paragraph is deep in the manifesto of Prime Minister Shinzo Abe's Liberal Democratic Party (LDP) and refers only to promoting understanding of sexual diversity, even this was unthinkable a decade ago.
By Asian standards, Japanese laws are relatively liberal - homosexual sex has been legal since 1880 - but social attitudes keep the lesbian, gay, bisexual and transgender (LGBT) community largely invisible.
LGBT rights are not covered in Japan's Equal Opportunity Act and there are no anti-discrimination laws.
But things are changing.
Several municipalities, including two Tokyo districts, now give same-sex partners rights similar to spouses, as do a growing number of companies.
On his second attempt in 2011, Ishizaka won the Tokyo district assembly seat, and this time he said there were tears, not titters, when he spoke.
Gaku Hashimoto, an LDP lawmaker in the lower house of Parliament who sits on a committee working for a law on LGBT rights, said winning the hosting rights for the 2020 Summer Olympics had helped bring change, since the Olympic charter mandates equality, including on matters of sexual orientation.
"The LDP has some very conservative aspects, and I believe there weren't a lot of people aware of this issue, so without this outside pressure, things might not have come this far," said Hashimoto, son of a former prime minister.
"But at the same time, society has developed ... There's a lot of debate on the issue, and local governments are taking their own steps."
Helping society understand LGBT issues and obtaining a social consensus should nevertheless come before anti-discrimination laws, he added.
Critics say the LDP mostly wants to burnish its image overseas before the Olympics, with an eye to luring tourists.
"The LDP and people in the core of government ... if they could get by without dealing with LGBT issues, they would. But there's the calculation that doing nothing looks bad overseas," said Akiko Shimizu, associate professor of Gender and Sexuality Studies at Tokyo University.
"In reality they oppose same-sex marriage and don't clearly talk about laws to forbid discrimination."
Same-sex marriage remains a distant dream in Japan, where some gays still enter heterosexual marriages of convenience or sport wedding rings as straight camouflage.
"There's the whole family system ... - a father, a mother, children, and the inheriting of assets. Conservatives don't want to break this system down," Ishizaka said.
The main opposition party, the centrist Democratic Party, hasn't weighed in on same-sex marriage either, he added. Its manifesto does mention anti-discrimination measures.
"SPIRIT OF DIVERSITY"
Public views remain mixed. A 2015 survey by a research group led by Kazuya Kawaguchi at Hiroshima Shudo University found that while 51 percent of respondents supported the idea of same-sex marriage, they were less willing to countenance an LGBT relative, friend or colleague.
As many as 53.2 percent said they were repelled by the idea of a gay male friend.
But even this is an improvement, said Takahiko Morinaga, CEO of the new Japan LGBT Research institute, noting the influence of social media and news events such as the U.S. same-sex marriage ruling and Japan's winning the Olympics.
"Those of us in the gay community had pretty much given up, feeling strongly that Japan was not a place where you could expect to come out. These events gave us a bit of hope," he added.
"These things have really brought the global spirit of diversity to the attention of Japanese corporate executives, as well as media and ordinary citizens."
Panasonic Corp this spring joined a handful of firms that give same-sex partnerships some of the rights of married couples, while others allow same-sex partners family rights for phone bargain schemes and airline mileage.
With LGBT spending estimated at 5.9 trillion yen ($58 billion), others are eyeing the potential of the "pink yen" in Japan's stagnant economy.
"There are a lot of services that LGBT people want - insurance that includes a same-sex partner, housing, and services connected to ageing," said Morinaga.
Human resources personnel at Nomura Securities, a pioneer in Japanese LGBT inclusion since it bought U.S. investment bank Lehman Brothers in 2008 and adopted its equality policies, say they are getting more inquiries from companies looking to implement diversity policies, including domestic firms eager to recruit and retain talent.
"It's starting to become a situation where if somebody does it, the others have to fall in line, especially in the same industry," said Yuki Higashi, Japan Head of Talent Management, Diversity & Inclusion at Nomura.
Politics might take a little longer to fall in line.
"We're aware that people say it's not enough, and that we aren't going as far as to ban things - but just to get this far, we've really had to balance the opinions of many people," said lawmaker Hashimoto. ($1=101.0400 yen) (Additional reporting by Kwiyeon Ha; Editing by Will Waterman)