UPDATE 2-Japan capex fall slows, 2nd qtr GDP seen revised up

* Q2 capex falls 1.7 pct yr/yr vs forecast 6.5 pct drop

* Q2 GDP seen revised up from preliminary reading -analysts

* Strong yen, slowing exports to U.S. and China pose risks
(Adds graphics link)

By Kaori Kaneko

TOKYO, Sept 3 (Reuters) - Japanese companies cut capital
spending in April-June by a less-than-expected 1.7 percent from
the same period last year, pointing to an upward revision of an
anaemic preliminary reading for second-quarter GDP growth.

But the strong yen and slowing exports to major destinations
such as the United States and China may hurt business sentiment
and corporate willingness to spend, boding ill for the economic
outlook, analysts say.

"The better showing in capital spending reflected improving
corporate profits, a trend that is likely to continue for now,"
said Yoshiki Shinke, senior economist at Dai-ichi Life Research
Institute.

"But given that some signs of a slowdown in the economy are
emerging, there is a risk that the appetite for corporate capital
spending may be curbed. Corporate capital spending is expected to
remain in a moderate uptrend, but it will not be strong enough to
lead the economy."

The 1.7 percent fall in capital spending for April-June was
slower than a median market forecast of a 6.5 percent decrease
and an 11.5 percent drop in the first quarter, Ministry of
Finance data showed on Friday. [JPBUSX=ECI]

The figures mean second-quarter gross domestic product (GDP)
growth will likely be revised up from a preliminary estimate of a
meagre 0.1 percent, analysts say.

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Graphic on capex and GDP: link.reuters.com/zyh29n

Reuters package on the yen: r.reuters.com/nef47n

More stories on Japan's economy: [ID:nECONJP]

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The BOJ is likely to hold off on easing policy at its rate
review next week, after loosening policy at an emergency meeting
on Monday in the wake of the yen's surge to a 15-year high
against the dollar.

But the central bank is not off the hook, with the outlook
for the export-reliant economy uncertain.

"The economy could slow in the fourth quarter after
government subsidies for cars expire. At that point, people will
start worrying about recession, and the chance of monetary policy
easing becomes more likely," said Yasuo Yamamoto, senior
economist at Mizuho Research Institute.

The quarterly capital spending figures will be used to
calculate revised second-quarter GDP figures, due on Sept. 10.
(Writing by Leika Kihara, Editing by Edmund Klamann and Edwina
Gibbs)