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Business lobbies, worried Japan is lagging behind rivals such as South Korea in free trade deals, want Prime Minister Naoto Kan to offer to take part in the U.S.-led Transpacific Partnership (TPP) when he hosts the November 13-14 Asia-Pacific Cooperation (APEC) summit, which President Barack Obama will attend.

The government is set to announce basic guidelines for free trade deals this week ahead of the APEC summit. But many ruling Democratic Party lawmakers fear fallout from the TPP on Japan's long-protected and politically powerful farmers.

The Nikkei said the government would express its willingness to join negotiations for the TPP, which would eliminate tariffs on goods traded within the zone, in basic guidelines for Japan's free trade and economic partnership deals, for which it aims to get cabinet approval on Friday.

To address concern among farmers, the government also aims to compile a medium-term plan for reforms in agriculture and other key areas, details of which will be fleshed out after the APEC meeting, the newspaper added.

The government is expected to offer measures aimed at bolstering the international competitiveness of Japan's agricultural sector such as support for exports. It also plans to expand income subsidies to farmers, Nikkei said.

Even if Japan shows interests in participating in the TPP negotiations, it needs to get approval from other nations involved in TPP talks, including the United States, Singapore and Australia, to join talks.

Adding Japan, one of the world's largest economies, would greatly increase the potential market-opening gains of the proposed pact. But it could also complicate the negotiations because of U.S. industry concerns about lowering remaining tariffs on Japanese-made autos, and Tokyo's previous resistance to opening its rice and other agricultural markets.

(Reporting by Yoko Nishikawa; Editing by Chris Gallagher)