March 21, 2012 / 11:35 PM / 8 years ago

Japan manufacturer mood jumps, turns positive -Reuters Tankan

* Manufacturer sentiment index +2 in March, flat in June
    * Service sector sentiment +5 in March, +9 in June
    * Poll points to improvement in BOJ March tankan
    * Respondents say worst over but recovery moderate

    By Tetsushi Kajimoto and Sumio Ito	
    TOKYO, March 22 (Reuters) - Japanese big manufacturers
turned optimistic about business conditions for the first time
in four months, with their sentiment index for March jumping on
a strengthening U.S.  economy and the yen's retreat from record
highs, a Reuters monthly poll showed.	
    The 13 point advance in sentiment was the biggest gain in
more than 2-1/2 years, providing more evidence that Japan's
economy is recovering from last year's earthquake, flooding in
Thailand and appreciation in the yen.	
    But highlighting risks posed by European debt problems and
high oil prices, manufacturing confidence was seen only steady
in June, with respondents saying that even if the worst is
behind them, the recovery would be moderate at best.	
    The service sector mood was positive, albeit unchanged, in
March and is expected to edge up another 4 points in June to its
the highest reading since December 2007.	
    The Reuters Tankan is highly correlated with the Bank of
Japan's quarterly tankan survey and suggests that the next
central bank survey, due on April 2, could also show a marked
improvement.	
    The BOJ's tankan will help the central bank judge whether
the economy is on track for a moderate recovery or if it needs
further stimulus.	
    Many market players expect the BOJ to ease policy further in
the coming months after it took a more committed stance to
beating persistent deflation by setting an inflation goal.     
The BOJ kept monetary policy on hold last week after easing in
February.	
 	
	
   In the Reuters Tankan, the manufacturers' sentiment index,
derived by subtracting the percentage of pessimistic responses
from optimistic ones, rose 13 points to plus 2, the biggest
monthly gain since June 2009 and is seen flat at plus 2 in three
months time.	
    Sectors including automobiles, electronics, steel and
textiles saw marked improvements in confidence, although
sluggish demand and stubborn price falls remain a concern.	
    "Inventory adjustment for semiconductors is continuing. The
worst period is behind us but the recovery is moderate," a
machinery maker said.	
    Reuters polled 400 big firms from March 1-16, with 252
responding.	
    The index for non-manufacturers stayed flat at plus 5 and is
expected to improve to plus 9 in June, underpinned by sectors
such as construction and real estate that could benefit from
reconstruction-related demand.	
    The BOJ's last tankan survey in December showed big Japanese
manufacturers turned pessimistic in the final quarter of 2011 as
the world's No.3 economy suffered a mild contraction due to
flooding in Thailand, Europe's debt crisis and the yen's
strength.	
    But analysts expect growth to have bounced back in the first
quarter of this year.	
    With some progress on Europe's debt problems and brighter
signs in the U.S. economy, the yen has traded in a 83-84
range against the dollar recently, far from its record high of
75.31 yen on Oct. 31 when Japan intervened heavily to protect
exporters.	
    A string of robust economic data has also strengthened the
case for a more self-sustaining U.S. recovery with recent
figures showing the number of Americans claiming new jobless
benefits at a four-year low and a pick-up in manufacturing
activity in the Northeast.
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