(Japanese Princess Kiko (R), accompanied by her husband Prince Akishino (L), the second son of Emperor Akihito, arrive at Tokyo's Aiiku Hospital August 16, 2006. Kiko gave birth on Wednesday to a baby boy -- the first male heir to be born into the ancient imperial family in more than four decades, the Imperial Household Agency said on Wednesday. Photo: Reuters)

Japan's Princess Kiko gave birth on Wednesday to a baby boy -- the first male heir to be born into the ancient imperial family in more than four decades.

The birth of a boy, who will be third in line after his uncle and his father, will likely dampen debate on letting women inherit the throne -- an idea opposed by conservatives eager to preserve a tradition they say stretches back more than 2,000 years.

An Imperial Household Agency official told reporters Kiko had given birth by a Caesarean operation to the 2,558 gram (5 lb 10 ounce) boy at 8:27 a.m. (2327 GMT).

He said both Kiko, 39, and the baby were doing well. The birth took place at the private Aiiku Hospital, which has close ties to the royal family and has seen many celebrity births in the past.

Shops near Tokyo's Gakushuin University, where Akishino and Kiko met as students, were in celebration mode after hearing the news, with stores putting up celebratory posters.

No imperial boys had been born since Kiko's husband, Prince Akishino, in 1965, raising the possibility of a succession crisis. Crown Prince Naruhito, 46, and Crown Princess Masako, 42 have one child, 4-year-old Princess Aiko.

CEREMONIAL SWORD

Japanese emperors are no longer worshipped as gods since Hirohito renounced his divinity after Japan's defeat in World War Two, and have no political authority.

But the monarchy remains rich with symbolism and ritual and the birth of a possible imperial heir had mesmerized the media.

Later in the day, the infant was to receive a ceremonial sword from the emperor. Its name will be selected a week later.

Prime Minister Junichiro Koizumi had planned to revise the law to give women equal rights to ascend the throne but Kiko's pregnancy had already put the proposal on hold.

Not all Japanese, however, were likely to be equally gleeful about the birth of a boy, which will almost certainly scuttle prospects for a reform that would have allowed Aiko to become Japan's first reigning empress since the 18th century.

Share prices of baby goods makers, which had climbed on hopes the royal birth could help lift the nation's slumping birth rate, slid sharply as investors took profits after news of the birth.

Experts agree reform of the succession law will be needed eventually, despite the birth of the boy, since ensuring male heirs is difficult without a royal concubine.

The practice of emperors taking concubines ended when Emperor Akihito's late father, Hirohito, refused to take one.

SHORT-TERM FIX

"I think it solves the short-term problem but they still have got a major issue on their hands," said Kenneth Ruoff, a professor at Portland State University and author of "The People's Emperor."

"They have no reserve in terms of if something should happen to the child and down the road, they will have a crown prince and emperor with no other princes around."

Conservatives, however, would prefer to revive princely houses abolished after World War Two to expand the pool of possible male heirs, rather than let women reign.

The birth is the latest chapter in a drama that began when Masako, a Harvard-educated former diplomat, suspended public duties more than two years ago due to a mental illness caused by the stress of rigid royal life, including pressure to bear a son.

The saga has been followed by Japan's gossipy tabloid magazines, which have written of strife between Naruhito and Akishino over whether public duties take precedence over personal fulfillment and compared Masako, sometimes unfavorably, to the demure Kiko, who seems satisfied with a role as wife and mother.

Japan has had eight reigning empresses, the last in the 18th century, but conservatives stress they were stop-gap rulers.