TOKYO, Nov 21 (Reuters) - Japan's government and ruling parties are considering using money from state-owned Japan Post's massive savings and insurance units to make loans to regional businesses, a Japanese newspaper said on Saturday.

Japan Post Bank and Japan Post Insurance together hold around 300 trillion yen (S$4.6 trillion) in assets, a large portion of which is held in Japanese government bonds (JGBs).

The government and ruling parties are considering setting up regional investment funds with money from Japan Post, the government and municipalities, as well as regional banks, the Sankei Shimbun said.

Such funds would invest or lend money to regional firms, mutual funds that invest in such businesses, and to other privately-placed regional funds, Sankei said.

The new regional investment funds would solicit investment from regional financial institutions, so as not to take business away from them, the newspaper said.

"We will push this forward in a cooperative, rather than competitive manner," Sankei quoted a source at the People's New Party, a smaller member of the ruling coalition, as saying.

The report did not mention any figures regarding the possible size of the investment funds, or how much Japan Post Bank and Japan Post Insurance may invest.

Sankei said some within the ruling coalition were cautious about the idea, since it could take business away from regional banks and may also lead to concerns about the stable absorption of JGBs and spur a rise in long-term interest rates.

The 10-year JGB yield hit a five-month high of 1.485 percent earlier this month, hurt by concerns about the size of possible debt issuance later this fiscal year and in the next fiscal year.

The investment stance of Japan Post's banking unit has been in the spotlight after Yoshifumi Nishikawa resigned as Japan Post president under government pressure in October, and was succeeded by a former Ministry of Finance bureaucrat.

That change in personnel has stirred market speculation that the government's sway over Japan Post Bank would increase, although some market players have speculated that such a rise in influence could prompt Japan Post Bank to lend more support to the JGB market rather than conduct any shift away from JGBs.