Japan Business Sentiment Dives; BOJ Sees More Pain

Japanese business sentiment has suffered its sharpest crash in three decades, a Bank of Japan survey showed on Monday, and the central bank said no early turnaround was expected with the economy set to shrink next year.

But markets rallied despite the gloomy news from Asia's biggest economy, buoyed by expectations that the White House would step in to prevent the collapse of the "Big Three" U.S. automakers after the Senate's rejection of a bailout.
That news had sent world markets reeling on Friday as investors feared another ugly turn in a global crisis that began last year with the collapse of U.S. subprime mortgages and which has now sent major economies, including Japan, into recession.
The Bank of Japan's tankan survey gauging big manufacturers' sentiment fell to minus 24, slightly worse than expected, from minus 3 the previous quarter. It was the biggest fall since the oil crises of the 1970s and the bleakest outlook since 2002, when Japan was recovering from a slump sparked by a banking crisis.
The survey pointed to more economic gloom.

"The extent of the worsening outlook for March is a bit shocking," said Susumu Kato, chief economist at Calyon Capital Markets Japan. "The figures were within expectations but the outlook for March is seen worsening further. Thus, it's hard to predict the bottom of the current economic cycle."
Bank of Japan Governor Masaaki Shirakawa told the Financial Times the Japanese economy may contract in the year to March 2010. The central bank had previously forecast a modest recovery with 0.6 percent growth in the next fiscal year.
"Until recently, the Japanese economy was relatively immune from turbulence in credit markets overseas. But the picture changed after the collapse of Lehman Brothers," Shirakawa said.
In a historic meeting on Saturday, Japan, China and South Korea pledged joint action to tackle the impact of the global crisis, despite decades of animosity.
But while they promised not to create new trade barriers over the next year and backed efforts to bolster a regional safety net of currency swaps, they did not unveil any new initiatives.

CHINESE OUTPUT GROWTH FALTERS
China and India, Asia's key emerging economies, expect robust growth despite the global slowdown. But they are still suffering.
China's annual industrial output growth slowed to 5.4 percent in November, the weakest in at least nine years for a non-holiday month and down from 8.2 in October, the National Bureau of Statistics said on Monday. The median forecast of 26 economists polled by Reuters was for growth of 7.1 percent.
President Hu Jintao said the employment situation would be "very serious" in 2009.
"Next year's employment market will be very serious, affected by the international financial crisis," Xinhua quoted Hu as saying. Analysts say unemployment could fuel more social unrest.

Data on Friday showed Indian factory output fell in October for the first time in 13 years.
"It is a shocking figure," said T.K. Bhaumik, economist at JK Industries Group. "This is a wake up call for the government."
As U.S. President George W. Bush arrived in Afghanistan after a visit to Iraq, the White House said any announcement on a rescue plan for the auto industry was unlikely until he returned to the United States.
"I don't anticipate anything before we return. ... I just don't expect anything for a while," spokeswoman Dana Perino told reporters on Air Force One.

Bush said last week his administration would consider using part of the Treasury's $700 billion bailout package for financial institutions to keep U.S. automakers afloat in the short term.
The bankruptcy of one of Detroit's Big Three would be another blow for the U.S. economy, with knock-on effects hitting many secondary industries and reverberating around the globe.
Hopes of a rescue buoyed Asian shares -- at 0315 GMT Japan's benchmark Nikkei 225 was up 4.7 percent, the Hang Seng had gained 3.25 percent, and Seoul's bourse was 4.5 percent stronger. Automaker stocks gained across the region.
Australia's S&P/ASX 200 index rose 3 percent.
The yen was trading around 91 per dollar after shooting higher on Friday to nearly 88 per dollar, a 13-year high, when investors bought it as a safe haven following the collapse of the auto talks in the Senate.

[ForexGen Academy]


If you are an experienced ‘FOREX’ Trader or just a beginner looking for the opportunities offered in the ‘FOREX’ market, [Forexgen] has created ForexGen Academy to give you the chance to get a ‘FOREX’ education and improve your trading skills. No hard expressions, no buzz words, and no rocket science language are used throughout these lessons.
How to Get Started?

People are introduced to the exciting world of foreign exchange in many ways: friends, current events, newspapers, television, and many others. For those of you who are new to forex, the following guidelines cover the basics of currency trading.

also do you Know ForexGen Lowest spreads in the market with 0-1 pip spread in 10 pairs, no commissions, no swaps and instant account Activation.