(Click on [ID:nT152332 ] for table)
By Shigeo Kodama
TOKYO, Dec 2 (Reuters) - Confidence among Japanese manufacturers fell at its sharpest pace on record to its worst pessimism in nearly seven years in November, a Reuters poll showed on Tuesday, as Japan grapples with its first recession in seven years.
The monthly poll of major Japanese firms, which tracks the Bank of Japan's closely watched quarterly tankan next due on Dec. 15, is another sign of a deeper and longer recession, as the financial crisis dries up demand for Japanese exports.
Underlining the woes at many Japanese firms, the BOJ will hold an emergency policy meeting from 1 p.m. (0400 GMT) on Tuesday to discuss measures to help ease a squeeze in financing for many firms, to be followed by a news conference by Governor Masaaki Shirakawa at 3:30 p.m. (0630 GMT).
The yen's rise against major other currencies and worsening demand both at home and abroad helped push manufacturers' sentiment down to minus 42 from minus 25 in October in the Reuters Tankan, the biggest monthly drop on record.
The last BOJ tankan showed Japanese business sentiment turning pessimistic for the first time in five years, hit by the global slowdown and financial turmoil.
The November reading was the lowest since March 2002, when it was minus 47 around a time when Japan started emerging from its last recession, triggered by the burst of global dot.com bubble.
"We are suffering from a triple blow of a stronger yen, high raw materials costs and output adjustments at our clients," an official at an electric machinery maker said in the survey of 231 firms taken Nov. 12-27.
Manufacturers forecast business conditions will improve slightly in the next three months but still expect to extend their run of pessimism from the current seven months.
The Reuters Tankan showed sentiment in the service sector at its lowest point since August 2003, with the index down seven points at minus 16.
Non-manufacturers see their situation worsening further.
The Reuters Tankan comes days after figures showing Japanese industrial output fell sharply in October and manufacturers were forecasting record falls in output in the coming months, prompting warnings that growing global gloom means Japan's recession will be even deeper and longer. [ID:nT133784]
Morale among makers of autos and transport machinery, and electrical goods -- main players behind Japan's export-driven expansion in recent years -- were hit hard by falling demand for their products on a slowdown in the United States and other parts of the world.
Sentiment for the autos/transport equipment sector fell to minus 75 from minus 22 in October, marking the lowest reading since October 1998, when Japan was caught up in a banking crisis. The index for electric machinery fell 16 points to minus 46, the lowest since March 2002.
Compared with September, around the time of the last BOJ tankan survey, the index fell 28 points for manufacturers and 6 points for non-manufacturers.
The index readings are derived by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A negative index figure means most of those surveyed are pessimistic about conditions. (For more stories on the financial crisis click [ID:nCRISIS]) (Writing by Tetsushi Kajimoto; Editing by Michael Watson)