Japan corp mood dips as yen, global slowdown bite

Japanese manufacturing sentiment worsened in October for the first time since the aftermath of the March earthquake and faltering global growth combined with a strong yen is expected to dampen it further, a Reuters poll showed on Thursday.

The monthly poll, which is highly correlated with the Bank of Japan's closely watched quarterly tankan corporate survey, added to growing evidence that the economy's quick rebound from the devastating earthquake and tsunami in March is losing momentum.

The central bank has kept its policy unchanged since it boosted its asset buying scheme in August, but has been flagging heightened risks stemming from Europe's sovereign debt woes and global economic slowdown.

The Reuters Tankan showed the manufacturing sentiment index, derived by subtracting the percentage of pessimistic responses from optimistic ones, fell two points from September to plus 6, the first drop since it plunged by a record in April after the March 11 disaster.

The index is seen sliding further to plus 4 in January, dragged down by sectors such as electric machinery and transport equipment.

That sense of caution was also apparent in the Reuters Tankan, taken from Sept. 26 to Oct. 7. The poll covered 400 big companies, of which 250 responded.

In a sign that weak domestic demand is also weighing on the world's No.3 economy, service-sector firms' sentiment index fell for the second straight month to barely above zero, with their mood seen rising only slightly in the coming three months.