(Updates Saturday story with latest from Kyodo, edits)

By Tim Kelly

NARA, Japan, July 9 (Reuters) - The man arrested for Shinzo Abe's killing believed the former Japanese leader was linked to a religious group he blamed for his mother's financial ruin and spent months planning the attack with a homemade gun, police told local media on Saturday.

Tetsuya Yamagami, an unemployed 41-year-old, was identified by police as the suspect who approached Japan's longest-serving prime minister from behind and opened fire, an attack that was captured on video and shocked a nation where gun violence is rare.

Wiry and bespectacled with shaggy hair, the suspect was seen stepping into the road behind Abe, who was standing on a riser at an intersection, before unloading two shots from a 40-cm-long (16-inch) weapon wrapped with black tape. He was tackled by police at the scene.

Yamagami was a loner who did not reply when spoken to, neighbours told Reuters. He believed Abe had promoted a religious group that his mother made a "huge donation" to, Kyodo news agency said, citing investigative sources.

He told police his mother went bankrupt from the donation, the Yomiuri newspaper and other media reported.

"My mother got wrapped up in a religious group and I resented it," Kyodo and others quoted him as telling police. Nara police declined to comment on the details reported by Japanese media of Yamagami's motive or preparation.

Media have not named the religious group he was reportedly upset with.

Yamagami jury-rigged the weapon from parts bought online, spending months plotting the attack, even attending other Abe campaign events, including one a day earlier some 200 km (miles) away, media said.

He had considered a bomb attack before opting for a gun, according to public broadcaster NHK.

The suspect told police he made guns by wrapping steel pipes together with tape, some of them with three, five or six pipes, with parts he bought online, NHK said.

Police found bullet holes in a sign attached to a campaign van near the site of the shooting and believe they were from Yamagami, police said on Saturday. Videos showed Abe turning toward the attacker after the first shot before crumpling to the ground after the second.

HOSTESS BARS

Yamagami lived on the eighth floor of a building of small flats. The ground floor is full of bars where patrons pay to drink and chat with female hostesses. One karaoke bar has gone out of business.

The elevator stops on only three floors, a cost-saving design. Yamagami would have had to get off and walk up a flight of stairs to his flat.