* Big manufacturers' sentiment DI +4 vs -8 in March
* Big non-manufacturers' mood also improves - tankan
* Big firms project 5.5 pct rise in FY2013/14 capex
By Leika Kihara and Tetsushi Kajimoto
TOKYO, July 1 Japanese manufacturers' sentiment
turned positive in the three months to June for the first time
in nearly two years, a closely-watched central bank survey
showed, a sign the recent market turbulence has yet to hurt the
feel-good mood created by the government's reflationary
The headline index for big manufacturers' sentiment improved
12 points from three months ago to plus 4, slightly better than
a median market forecast of plus 3, the Bank of Japan's
quarterly "tankan" survey showed on Monday.
That was the second straight quarter of improvement and the
first positive reading - which means optimists outnumbered
pessimists - since the survey of September 2011, a vindication
of Prime Minister Shinzo Abe's "Abenomics" policy of aggressive
monetary stimulus and fiscal spending.
Service-sector sentiment also brightened as consumers spent
more, with the index for big non-manufacturing companies rising
6 points to plus 12, the tankan showed. That compared with a
median market forecast of plus 11.
The outcome bodes well for the central bank, keen to end
grinding deflation that has haunted Japan for 15 years and
achieve its 2 percent inflation target in roughly two years
through aggressive monetary stimulus.
Big manufacturers expect business conditions to improve
further three months ahead, suggesting they see the negative
effect of recent market turbulence on the economy as limited -
at least for now.
The survey was compiled amid acute volatility that drove up
bond yields and wiped out the gains in Tokyo shares made on
investors' big hopes for Abe's stimulus plans.
But big firms plan to increase capital expenditure by 5.5
percent in the current business year from April, more than a
median market forecast of a 2.9 percent rise, a sign the
positive mood may be prompting them to expand business
Financial markets have rallied strongly since Abe first
highlighted his brand of aggressive policymaking late last year.
They got a further boost in April, when the BOJ unleashed an
intense burst of stimulus by pledging to double the supply of
money in two years.
But the positive market sentiment turned around in late May
when the BOJ's huge asset purchases disrupted the bond market
and drove up yields which, coupled with expectations of the U.S.
Federal Reserve's tapering of monetary stimulus, hit global
stocks and triggered a rebound in the safe-haven yen.
Still, the tankan, a key touchstone for BOJ policymakers,
reinforced the view that Japan's economy remains on track for a
steady recovery backed by a pickup in exports and private
Many analysts expect the BOJ to keep monetary policy steady
at its next policy-setting meeting next week.
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.