— Japan MOF: Q3 Sentiment Worse Than +10.1 Forecast In Q2 Poll
— Japan MOF: Major Firm Sentiment Seen Q4 +0.1 Pt, Q1 +3.9 Pt
— Japan MOF: FY10 All Firm Capex Plans +8.7% Vs Q2 Poll +9.2%
— Japan MOF: FY10 All Capex Ex-Software, Land +8.4%; Q2 +9.7%

TOKYO (MNI) – The business sentiment diffusion index for major
Japanese firms rose to a four-year high of +7.1 percentage points in the
July-September quarter from +4.0 points in the previous quarter, the
results of a quarterly government survey released on Thursday showed.

The Q3 index hit the highest level since +10.5 points marked in
July-September 2006.

In the previous survey conducted in May and released in June, the
index for the third quarter of 2010 was forecast to improve faster to
+10.1 from +4.0 in the second quarter.

The Q3 headline index was the second consecutive positive figure
following +4.0 in Q2, which showed the first positive number in three
quarters.

Business sentiment has recovered from -22.4 in April-June 2009 and
-51.3 in January-March 2009.

The index is computed by subtracting the percentage of companies
reporting deteriorating business conditions from the percentage of those
reporting an improvement. A positive figure indicates the majority of
firms see butter business conditions.

The latest survey also showed that major firms’ sentiment is
expected to worsen to +0.1 percentage point in October-December (revised
down from +9.3 points seen in the previous survey) before rising to +3.9
points in January-March of 2011 (initial reading).

The survey showed that companies expect their combined capital
spending to rise 8.7% in the current fiscal year ending on March 31,
2011 from a year before, slower than the 9.2% increase projected in the
previous survey.

The capex plans are by all firms including those in the financial
sector. Investment in software is included but purchases of land are
excluded from the data.

Manufacturers expect a 9.4% rise in capex during this fiscal year,
down from +12.5% seen in the previous survey, while non-manufacturers
see a 8.3% rise, up from +7.5% projected about three months ago.

The survey also showed that companies expect their combined capital
spending excluding software and land to increase 8.4% in fiscal 2010,
down from +9.7% forecast in the previous survey.

The Finance Ministry and the Cabinet Office conducted the joint
survey on Aug. 15, covering 15,489 companies capitalized at Y10 million
or over, of which 12,176 replied.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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