Reuters: US Dollar Report: UPDATE 1-Japan firms less gloomy, plan capex rise-tankan

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UPDATE 1-Japan firms less gloomy, plan capex rise-tankan Jul 2nd 2012, 00:04 Sun Jul 1, 2012 8:04pm EDT * Big manufacturers' sentiment index -1 vs f'cast -4 * Big non-manufacturers' index +8 vs f'cast +7 * Big firms expect 6.2 pct rise in fiscal 2012/13 capex By Leika Kihara and Rie Ishiguro TOKYO, July 2 (Reuters) - Japanese manufacturers were less pessimistic about business conditions in the three months to June, the central bank's closely watched tankan survey showed, a sign that the economy was on track for a moderate recovery despite the pain from Europe's debt crisis and slowing overseas growth. Service-sector sentiment also continued to recover as companies benefitted from solid private consumption and spending for rebuilding from last year's earthquake and tsunami. Big manufacturers expect business conditions to improve in the next three months, the survey showed, underscoring the view that the world's third largest economy is headed for a recovery. The June tankan's headline sentiment index for big manufacturers was minus 1 i n June, up three points f rom March and better than the median market forecast of minus 4, the quarterly survey showed on Monday. Big non-manufacturers' sentiment improved three points from three months before to plus 8, roughly in line with t he median forecast of plus 7, the survey showed. The tankan, which reflects broad trends in the economy, will be closely scrutinised when Bank of Japan policymakers meet on July 11-12 to issue revised quarterly growth forecasts and debate whether the economy needs further monetary stimulus. Some analysts believe the central bank may ease monetary policy again to show its determination to beat deflation. While the BOJ has signalled it is ready to act again, many in the bank prefer to stand pat for now unless a yen spike or renewed market turmoil triggered by Europe's crisis threaten to derail Japan's recovery prospects. Japan's economy is expected to outperform most of its G7 peers this year with growth of around 2 percent, helped by earthquake reconstruction spending. But the stubbornly strong yen, Europe's continuing debt crisis and slowing growth in emerging economies are clouding the outlook for the export-reliant economy. The June tankan, compiled between May 29 and June 29, also showed big firms plan to raise their capital spending b y 6.2 percent i n the financial year that ends in March 2013, more than a median forecast in a Reuters poll for a 3.5 percent increase. The tankan's sentiment indexes are derived by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A negative reading means pessimists outnumbered optimists. Link this Share this Digg this Email Reprints

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