UPDATE 1-Japan business mood improves as market reacts to 'Abenomics'
* Big manufacturers' sentiment DI -8 vs forecast -7
* Service-sector sentiment DI +6 vs forecast +8
* Manufacturers expect improvements 3 months ahead
* BOJ likely to ease at Kuroda's first rate review
By Leika Kihara and Kaori Kaneko
TOKYO, April 1 (Reuters) - Japanese business sentiment improved in the first three months of 2013, a central bank survey showed on Monday, after Prime Minister Shinzo Abe's aggressive monetary and fiscal policy prescriptions helped to weaken the yen and bolster share prices.
The survey comes ahead of the Bank of Japan's first policy-setting meeting under new Governor Haruhiko Kuroda this week, when the board is set to expand monetary stimulus and debate an overhaul of its policy framework.
Big manufacturers' mood improved after two straight quarters of deterioration, with the headline sentiment index rising 4 points to minus 8, the BOJ's closely watched tankan quarterly survey showed. That was roughly in line with a median market forecast of minus 7.
The manufacturers expect business conditions to improve in the three months ahead with an index gauging the outlook at minus 1, signalling that prospects for the world's third-largest economy were turning up.
The tankan report, a key touchstone for BOJ policymakers, underscores the view that Japan's economy is gradually recovering from last year's recession and headed for a moderate recovery driven in part by a pickup in global demand.
Abe's ambitious push for big stimulus spending and monetary easing by the central bank - dubbed "Abenomics" - has also offered some relief to the export-reliant economy by helping to weaken the yen and lift Tokyo share prices.
Big manufacturers expect the dollar to average 85.22 yen in the current fiscal year from April, up sharply from their estimate of 80.56 yen for the previous year ended in March.
In a sign of a broadening recovery, the sentiment index for big non-manufacturers improved 2 points to plus 6, the tankan showed. The index for the three months to June was at plus 9.
The survey results are broadly in line with the Reuters Tankan survey issued last month, which showed sentiment among manufacturers improved for a fourth straight month in March.
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.
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