— Japan MOF: Q2 Sentiment Better Than -1.6 Forecast In Q1 Poll
— Japan MOF: Major Firm Sentiment Seen Q3 +10.1 Pt, Q4 +9.3 Pt
— Japan MOF: FY10 All Firm Capex Plans +9.2% Vs Q1 Poll -5.7%
— Japan MOF: FY10 All Firm Capex Ex-Software, Land +9.7%

TOKYO (MNI) – The business sentiment diffusion index for major
Japanese firms rose to +4.0 percentage points in the April-June quarter
from -2.4 points in the previous quarter, the results of a quarterly
government survey released on Monday showed.

In the previous survey conducted in February and released in March,
the index for the second quarter of 2010 was forecast to improve only to
-1.6 from -2.4 in the first quarter.

The index showed the first positive figure in three quarters since
+0.3 percentage point in July-September 2009. The +4.0 reading for Q2
this year was the highest since +6.2 points in July-September 2007.

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 continue improving to +10.1 percentage points in
July-September (revised up from +6.8 seen in the previous survey) before
slipping to +9.3 points in October-December (initial reading).

The survey showed that companies expect their combined capital
spending to rise 9.2% in the current fiscal year ending on March 31,
2011 from a year before, compared with a fall of 5.7% 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 form the data.

Manufacturers expect a 12.5% rise in capex during this fiscal year,
up from -0.9% seen in the previous survey, while non-manufacturers see a
7.5% rise, also up from -8.0% projected about three months ago.

The survey also showed that companies expect their combined capital
spending excluding software and land to increase 9.7% in fiscal 2010, up
from -5.5% forecast in the previous survey.

The Finance Ministry and the Cabinet Office conducted the joint
survey on May 15, covering 15,828 companies capitalized at Y10 million
or over, of which 12,380 replied.

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

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