Japanese manufacturers' sentiment fail to improve in March

Sentiment among Japan's largest manufacturers failed to improve in March as executives predicted the yen would rebound against the dollar, which hurt export sales and profits.

The quarterly Tankan index continued to remain at minus 4 in December, according to the Bank of Japan, which fell short of the median estimate of 25 economists surveyed by Bloomberg News for a reading of minus 1. A negative number shows a greater number of pessimists than optimists.

Analysts said the failure of the Tankan to improve, would undermine possibility of a rebound in the world's third-largest economy.

According to Sony it predicted its loss in the year ended on 31 March would widen to 220 billion yen, more than double the earlier estimate.

A weakening currency, as also gains in stock prices this year are lifting confidence only marginally as exporters struggle to regain ground lost when the yen surged to a postwar record in October. Today's report showed that the index was expected to remain negative at minus 3 in June with the yen to strengthening to around 6 per cent from today's level to average $78.14 per this fiscal year.

According to some analysts, the Tankan signalled business managers thought it would take some time for the economy to regain momentum. They added they were still concerned about the risk of the yen appreciating again because they had been traumatised by a strong currency.