UPDATE 1-Japan coincindent index rises, govt upgrades view

(For more stories on the Japanese economy, click [ID:nECONJP])

* Coincident index up for 6th straight month

* Govt: coincident index shows economy turning upwards

* Leading index up for 7 months in a row (Adds details)

By Rie Ishiguro

TOKYO, Nov 6 (Reuters) - Japan's government upgraded its assessment of an index measuring current economic conditions, as the economy slowly recovers from its worst downturn in decades.

Exports and output have pulled the economy out of its longest postwar recession but analysts say a full-fledged recovery is not on the horizon as worsening job losses and wage falls weigh on household consumption.

"The rebound has been supported by a recovery in industrial output. But we need to note that the production level is still low, which suggests limited chances for a recovery in employment," said Junko Nishioka, chief Japan economist at RBS Securities.

"It's true that the worst is behind us and there's been progress but the economy has not returned to normal yet," she said.

The index of coincident economic indicators rose a preliminary 1.3 points in September from August, climbing for the sixth straight month, the Cabinet Office said on Friday.

The Cabinet Office upgraded its assessment on the coincident index, saying it could signal the economy was turning upwards and has likely emerging from a downtrend. The upgrade was the first since May.

The index of leading economic indicators, compiled using data such as the number of job offers and consumer sentiment, rose 3.2 points from August to mark the seventh straight month of increases, the Cabinet Office said.

The coincident index is used to measure whether the economy is expanding or deteriorating, and to determine when it peaked or bottomed.

It takes several months after a change in assessment for the government to officially decide whether there was a shift in the economy's trend.

Japan's economy emerged from recession in April-June after contracting for four straight quarters, the longest such sequence since World War Two, as exports and output bounced back on a pickup in global demand and the effect of government stimulus.

But analysts expect any recovery to be slow and fragile as rising job losses and falling wages weigh on household consumption.

This contrasts with other Asia-Pacific countries such as Australia where aggressive government stimulus has worked so well as to require some monetary tightening.

A Reuters poll showed economists expect Japan's July-September real gross domestic product, due out on Nov. 16, to have grown 0.7 percent from the previous quarter. [ID:nT81019] (Editing by Joseph Radford)