UPDATE 1-Japan business mood sours on yen rise, global slowdown

* Big manufacturers' Dec sentiment index -4 vs, -2 forecast, Sept +2

* Big manufacturers' March outlook index -5

* Big firms' FY2011/12 capex plan +1.4 pct

By Rie Ishiguro and Leika Kihara

TOKYO, Dec 15 (Reuters) - Japanese business mood turned pessimistic in the three months to December, the central bank's tankan survey showed, a sign the stubbornly strong yen, Europe's debt crisis and slowing global growth were taking their toll on the export-reliant economy.

The sobering reading adds pressure on the Bank of Japan to offer further monetary stimulus, although the bank has signalled it would prefer to stand pat next week to save its limited ammunition in case the pain from Europe's crisis deepens.

The December tankan's sentiment index for big manufacturers worsened to minus 4 in December from plus 2 three months ago, indicating pessimists outnumber optimists. The reading, which reflects broad growth trends in the economy and serves as one of the central bank's key policy gauges, was worse than a median estimate of minus 2.

The outlook also worsened, with big manufacturers expecting business conditions to deteriorate three months ahead with the outlook index for March next year at minus 5, the closely watched survey showed on Thursday.

Japan's economy rebounded from a recession triggered by the March earthquake and tsunami, but is expected to slow sharply this quarter as the initial spurt driven by companies restoring supply chains and production facilities tails off.

The central bank is sticking to the view that Japan is headed for a moderate recovery but has said exports and factory output will stagnate for the time being due to slowing global growth.

Big firms cut their capital expenditure plans for the year to next March to a 1.4 percent increase from a 3.0 percent gain projected in the previous survey in September, against a median forecast for a 2.5 percent increase, the tankan showed.

Japan intervened in the currency market and eased monetary policy in October to ease the pain from sharp yen rises on the export dependent economy.

The BOJ kept monetary settings unchanged last month but has expressed increasing concern over the fallout from Europe's debt crisis, signalling its readiness to act again if Japan's recovery prospects are threatened. It next meets for a policy review on Dec. 20-21.

The tankan indexes are derived by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A negative reading in the diffusion index indicates pessimists outnumber optimists.