HIGHLIGHTS 2-Japan firms cautious on outlook-BOJ tankan

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TOKYO, Sept 29 (BestGrowthStock) – Japanese manufacturers’ confidence
improved for a sixth straight quarter, the Bank of Japan’s tankan
survey showed, but they were cautious about the outlook in a sign
that yen strength could derail the fragile economic recovery.

The closely watched survey for the three months to September
also showed big firms plan to raise capital spending at a slower
pace than expected, as a recovery in exports slows due to the
strong yen and moderating overseas demand.

Following are key points from a briefing on the BOJ’s
September tankan:

SENTIMENT

— Big manufacturers’ sentiment improved for the sixth
straight quarter to the highest level since March 2008. It was
the longest streak of gains since sentiment improved for seven
straight quarters to September 2000, a BOJ official said.

— Big non-manufacturers’ sentiment rose for a sixth straight
quarter to the highest since June 2008.

— Both small manufacturers’ sentiment and small
non-manufacturers’ confidence improved for a fifth straight
quarter to their highest levels since June 2008.

— Big and small manufacturers as well as non-manufacturers
all expect confidence to worsen over the next three months.

CAPEX/SALES

— Big firms plan to raise capital spending by 2.4 percent in
the fiscal year to March 2011, less than a median market forecast
for a 4.2 percent rise.

— Big manufacturers’ production capacity index fell to plus
12 from plus 17 in the June survey. The index has not returned to
levels seen before Lehman Brothers’ failure roiled the global
financial system.

FOREX

— Big manufacturers expect the dollar to average 89.66 yen
(JPY=: ) in the financial year to next March, weaker than the
forecast of 90.18 yen in the June survey.

PRICES

— Sales price indexes slipped for the first time in three
quarters for big manufacturers, while those for non-manufacturers
improved for the third straight quarter. But they are still in
negative territory, meaning prices remain under downward
pressure.

— Procurement price indexes fell for the first time in three
quarters for both big manufacturers and non-manufacturers.

— The indexes for domestic supply-and-demand balance
improved for a sixth straight quarter at large manufacturers,
showing they have fewer concerns about oversupply.

LENDING

— The financial conditions index for big companies rose to
the highest since September 2008.

— An index measuring how big companies view borrowing costs
declined by 8 points to minus 15, meaning more companies feel
borrowing costs are falling.

— An index measuring conditions for issuing commercial paper
at big firms improved for the sixth quarter, but was still in
negative territory.
(Reporting by Kaori Kaneko; Editing by Chris Gallagher)

HIGHLIGHTS 2-Japan firms cautious on outlook-BOJ tankan