* Manufacturers sentiment Nov index -19, lowest since 2010
* Non-manufacturers index +1, lowest since October 2011
* Recession looms as exports slump, consumption slackens
* Reuters Tankan highly correlated with BOJ tankan
By Tetsushi Kajimoto and Izumi Nakagawa
TOKYO, Nov 15 Sentiment among Japanese manufacturers fell for a fourth straight month, a Reuters poll showed, providing more evidence that the world's third-biggest economy is slipping into recession amid a global slowdown and tensions with China.
The monthly poll, which closely correlates with the Bank of Japan's quarterly tankan survey, comes after data this week showed the economy shrank 0.9 percent in July-September, the first contraction in three quarters.
Sentiment among non-manufacturers including retailers and construction firms tumbled in November after holding steady this year, a sign that private consumption is losing momentum after a recovery led by rebuilding from last year's earthquake and tsunami.
"Deterioration in manufacturers' sentiment has speeded up. The transport machinery sector is a prominent one which has also impacted on related sectors," said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance.
"It is still a question whether the sentiment for both manufacturers and non-manufacturers will improve next month as Japan's exports will likely continue to worsen at least within this year," he said.
Political turmoil could further add uncertainty for the economic outlook. Prime Minister Yoshihiko Noda is set to dissolve parliament's lower house on Friday for a snap election next month, which is likely to cost him his job and return to power a party that has governed Japan for most of the past 50 years.
A slew of weak data is likely to keep the central bank under pressure to ease monetary policy further after having boosted monetary stimulus for a second straight month in October as a strong yen and weak global demand threatened the export-reliant economy.
"Demand has fallen more than we expected and there's little sign of brightness in the outlook," a metal products firm said in the Oct. 29-Nov. 12 poll of 400 large and medium-sized firms, of which 270 responded.
"We have been affected by the European debt crisis and the slowdown in China, with a marked decline in demand for construction machinery in the Chinese market," one machinery firm said.
"The situation in Japan also remains severe as a strong yen has taken root even though rebuilding from the earthquake is gradually making progress."
Adding to the gloomy outlook both at home and overseas, ties between Japan and China have worsened sharply since September, when a row over disputed islands in the East China Sea led to violent anti-Japanese protests across China and damaged trade.
Firms in the autos/transport equipment sector were among those complaining about the effects of the dispute over the islands, called Senkaku in Japan and Diaoyu in China, which are located near rich fishing grounds and potentially huge oil and gas reserves.
In the Reuters Tankan, the manufacturers' sentiment index fell two points to minus 19 in November, matching a low seen in January 2010 as exporters of steel, chemicals, cars and electronics all struggled.
The index, derived by subtracting the percentage of pessimistic responses from optimistic ones, is expected to recover only slightly to minus 17 in February.
The index for non-manufacturers fell six points to plus 1, matching a low seen in October last year, led by sectors such as wholesalers, transport and electric utilities. It is seen edging up slightly to plus 3 in February.
Japan's economy outperformed most of its Group of Seven peers in the first half of this year on the back of reconstruction spending and private consumption, which accounts for roughly 60 percent of the economy.
But growth has ground to a halt since then, with the positive effect of rebuilding from last year's earthquake fading and the strong yen and a global slowdown weighing on exports.
Many analysts expect the BOJ to keep monetary policy unchanged in a review ending next Tuesday, but some see it easing policy again at a Dec. 19-20 meeting.