Highlights-Japan business sentiment falls less than expected

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TOKYO, July 1 (Reuters) - Japanese business sentiment worsened less than expected in the second quarter, a Bank of Japan survey showed on Tuesday, although it suggested that companies were feeling the pinch from rising costs and a global economic slowdown.

Following are highlights of the central bank's tankan quarterly business sentiment survey for June, based on a briefing by a Bank of Japan official:

DIFFUSION INDEX

-- The index for big manufacturers was plus 5, worsening for a third straight quarter and the lowest since plus 1 marked in September 2003.

-- The index for big non-manufacturers was plus 10, the lowest since plus 9 marked in June 2004.

-- The index for small manufacturers deteriorated to minus 10, matching a low marked in December 2003. For small non-manufacturers it worsened to minus 20, matching a low marked in March 2004.

-- The sales price index for big manufacturers rose 7 points to plus 10, the highest level since August 1980, meaning more companies said they were selling their goods at a higher price.

-- The input price indexes for both big and small non-manufacturers hit their highest levels since comparable data became available in May 1983, showing that more companies thought they were paying more to their suppliers.

-- The job condition index for companies of all types and sizes, which subtracts the percentage of companies feeling they are short of staff from those who think they have too many, was minus 5. That compared with minus 9 in the March survey, a sign that labour conditions were less tight.

PROFITS, CAPEX PLANS

-- Big manufacturers expect recurring profits to fall 9.9 percent in the current fiscal year to next March, after six straight years of increases.

-- Big non-manufacturers forecast a 3.8 percent decrease in recurring profits in the current financial year, after six consecutive years of profit increases.

-- Big firms plan to increase capital spending by 2.4 percent this business year, slightly above a median market forecast for a 2.0 percent rise but the weakest spending plan for a June survey in six years.

-- Small firms plan to slash capital spending by 20.2 percent in fiscal 2008, the weakest spending plan for a June survey in nine years.

-- Companies plan to increase hiring of new graduates by 4.1 percent this fiscal year, against a 6.6 percent rise the year before. They expect to cut such hiring by 1.3 percent in the fiscal year starting next April. (Reporting by Leika Kihara; Editing by Michael Watson)