Japanese business confidence hits four-year low

Japanese business confidence has slumped to the lowest level in more than four years as executives worry about a stronger yen, a weak US economy and high oil prices, a central bank survey showed Tuesday.
Confidence among major manufacturers tumbled to 11 in March from 19 in December, according to the Bank of Japan's quarterly Tankan survey. Market forecasts, on average, had been for a figure of 12.
It was the second straight quarterly decline, pushing sentiment down to the worst level since the fourth quarter of 2003, according to the survey, which covers a total of more than 10,000 companies.
Major manufacturers predict a further deterioration in business conditions to a figure of seven in June.
The index represents the percentage of firms experiencing favourable business conditions minus the percentage of those seeing unfavourable conditions.
Confidence among large non-manufacturers fell to 12 from 16 in the December.
Japan's corporate sector has been a key driver of the recovery in the world's second largest economy after a decade-long slump.
Helped by a weak yen and brisk exports, companies have racked up record earnings in recent years that allowed them to invest heavily in new equipment and factories.
But many firms are now looking to scale down capital spending to cope with an expected drop in earnings amid fears of a US recession and financial market turmoil that has pushed the yen sharply higher against the dollar.
Large manufacturers and non-manufacturers plan to cut their capital spending by 1.6 percent in the new fiscal year that began on Tuesday, while firms of all sizes and industries anticipate a reduction of 5.3 percent, the survey showed.
The combined current profit of all the companies is expected to rise by 2.4 percent in the fiscal year to March 2009, after a 1.6 percent drop in the previous year, the Bank of Japan reported.