Japan exports tumble, gloom spreads

It matched the decline registered in May 2011 and posted the sharpest fall since April that year after the massive earthquake and tsunami devastated Japan's northeast.

Sino-Japanese ties have deteriorated sharply since last month when a row over disputed islands led to violent anti-Japanese protests across China and badly hurt trade as some Chinese shunned Japanese cars and other products.

Exports to China, which overtook the United States as Japan's top market in 2009, fell 14.1 percent in September from a year earlier, the biggest decline since January. Shipments to the European Union also dropped a striking 21.1 percent as Europe's debt crisis remains entrenched.

Japanese carmakers reported tumbling sales in China for September - with Toyota Motor Corp's slipping by almost half - confirming the impact of the territorial dispute.

The BOJ cuts its economic assessment for eight out of nine regions in Japan, the central bank said in a quarterly report, as growth paused due to the slowdown overseas.

That was the largest number of downgraded regions since January 2009, when the central bank cut its assessment for all nine regions for two straight quarters in the wake of the failure of Lehman Brothers.

Global economic uncertainty remains high, and we must be vigilant to the effect of financial and currency moves on the economy and prices, BOJ Governor Masaaki Shirakawa said in a speech at a quarterly meeting of the central bank's regional branch managers.

The BOJ will continue to pursue easy monetary policy via steady purchases of assets, he said.

After loosening policy in September by boosting its asset-buying programme, the central bank has been under renewed political pressure to ease again at next week's policy review as a prolonged slowdown in China hits the export-reliant economy.

In the Reuters Tankan for October, the manufacturers' sentiment index, derived by subtracting the percentage of pessimistic responses from optimistic ones, fell 12 points to minus 17, the lowest since January 2010.

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