HIGHLIGHTS-Tankan shows Japan businesses turn pessimistic

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

TOKYO, Oct 1 (Reuters) - Japanese business sentiment turned pessimistic for the first time in five years, the Bank of Japan tankan survey showed, a sign that a global slowdown and financial turmoil are taking a toll as the economy teeters on the brink of recession.

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

-- The index for big manufacturers was minus 3, deteriorating for a fourth straight quarter and the first negative reading since the June 2003 poll, when it was minus 5

-- The index for big non-manufacturers was plus 1, the fifth straight quarter of a deterioration and the weakest reading since the December 2003 poll when the index was zero.

-- The index for small manufacturers was minus 17, the third straight quarter of decline, and the weakest reading since the September 2003 poll when the index was at minus 23.

-- The index for small non-manufacturers was minus 24, the sixth straight quarter of deterioration and the worst reading since the December 2003 poll when the index was minus 25.

-- The input price index for large manufacturers, which counts the number of companies expecting rising purchasing costs minus the number of respondents expecting falling purchasing costs, eased to plus 55 in September from plus 59 in June, the first decline in the index level in six quarters.

-- The selling price index for large non-manufacturers, which reflects the number of companies expecting rising selling prices minus those that are expecting falling prices, was plus 5, down from plus 10 in the June poll, the first fall in seven quarters.

-- The production capacity index for large manufacturers, which measures the number of companies with excess production capacity minus those that feel they have too little, was plus 2, the weakest showing since the December 2005 survey, suggesting a growing number of companies feel less need to build plants and boost production capacity.

-- The labour index for large manufacturers, which measures the number of companies that have excess workers minus those that believe they have too few, was minus 2, compared to minus 5 in the June survey, showing a waning appetite for hiring new labour.

PROFITS, CAPEX PLANS

-- Big manufacturers expect recurring profits to fall 10.4 percent in the fiscal year to next March, after six straight years of profit growth, bigger than a 9.9 percent drop seen in the June poll.

-- Big non-manufacturers forecast an 8.4 decline in recurring profits this financial year, after six consecutive years of rises, and bigger than the 3.8 percent drop seen in the June poll.

-- Big companies plan to raise capital spending by 1.7 percent this fiscal year, compared to a median market forecast for a 2.5 percent rise, reversing the 2.4 percent hike projected in the previous survey. This was also the first downward revision of the investment plans in two years.

-- Small firms plan to cut capital spending by 12.9 percent in the current fiscal year, smaller than the median market forecast for a 16.6 percent fall.

-- The index on the lending attitude of financial institutions, which counts the number of small companies feeling that financial institutions are ready to extend new loans minus those who feel lenders are strict about them, fell to minus 3, the weakest reading since the December 2003 survey when the index was minus 4, and down from plus 2 in the June poll. (Reporting by Tetsushi Kajimoto; Editing by Michael Watson)