UPDATE 1-Japan business mood edges up, quake impact looms-BOJ tankan

* Policymakers, analysts warn of sharp worsening of
sentiment ahead

* BOJ to issue post-quake reference sentiment index on

(Adds analyst quote, details)

By Rie Ishiguro

TOKYO, April 1 (Reuters) – Japanese manufacturers’ business
sentiment improved slightly in the three months to March, the
Bank of Japan’s closely watched tankan survey showed, but
analysts anticipate a downturn in confidence this quarter
following last month’s devastating earthquake and tsunami and a
subsequent nuclear safety crisis.

Policymakers and analysts warn that widespread power outages
and supply chain disruptions from the March 11 quake will
severely damage factory output and delay the economy’s return to
a moderate recovery.

The BOJ’s quarterly tankan survey showed the headline index
for big manufacturers’ sentiment improved to plus 6 in March
from plus 5 in December, compared with a median market forecast
of plus 7.

But 72 percent of replies for the survey came in before the
earthquake, which means it did not much reflect the impact of
the magnitude 9.0 earthquake and tsunami that flattened coastal
towns and cities in the country’s northeast, killed more than
11,000 and triggered the world’s worst atomic crisis in 25

The BOJ will release reference data for pre-quake and
post-quake sentiment at 8:50 a.m. Monday (2350GMT Sunday).

“Today’s data alone won’t be of much use so the reference
data next week was something that was needed,” said Takeshi
Minami, chief economist at Norinchukin Research Institute in

“We’re focusing on when companies see reconstruction demand
picking up. But we can assume business conditions will be very
severe ahead.”

The index for June was seen at plus 2, showing that
companies expected business conditions to worsen over the next
three months .

The sentiment indexes are derived by subtracting the
percentage of respondents who say conditions are poor from those
who say they are good. Negative readings mean pessimists
outnumber optimists.

(Writing by Leika Kihara; Editing by Edmund Klamann)

UPDATE 1-Japan business mood edges up, quake impact looms-BOJ tankan