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Japan business mood struggles amid Brexit fears: Reuters Tankan
[TOKYO] Confidence at Japanese manufacturers inched up in June from the prior month's three-year low and is seen rising only slightly ahead, a Reuters poll found, reflecting worries about the yen's rise as Britain decides whether or not to quit the European Union.
The monthly poll of 509 big and mid-sized firms taken June 6-16, of which 258 responded, comes just days before Britain's June 23 EU referendum, pushing up the safe-haven yen as risk appetite wanes.
The Reuters Tankan, which tracks the Bank of Japan's quarterly tankan survey, found the service sector's mood fell in June, due to weak private consumption.
The survey's results suggest a deterioration in business confidence in the upcoming Bank of Japan tankan, due out on July 1, which is among key indicators the central bank scrutinises when guiding monetary policy.
The BOJ held off from expanding its monetary stimulus last week, sending the yen surging across the board and prompting policymakers to fire verbal warnings against investors pushing the yen higher and undermining the export-reliant economy. "Due to rapid yen rises, our export prices are falling," a manager at a transport equipment maker said in the survey, which companies answer anonymously.
The Reuters Tankan sentiment index for manufacturers rose to 3 in June from 2 in May, which was the lowest reading since April 2013 when the BOJ embarked on massive monetary stimulus to reflate the economy.
The service-sector index fell to 17 from 19 in May, the lowest reading since April 2013, hurt by weak domestic demand, which has pushed Premier Shinzo Abe to postpone once again a planned sales tax hike to 2019.
"The yen's rise is putting the brakes on sales to foreign tourists and falling share prices are cooling the appetite for purchases among the wealthy," a retailer said in the survey.
The indexes for manufacturers and service-sector firms are seen improving by just one point and three points, respectively, in the next three months, a sign of tepid economic recovery in the absence of a significant growth driver.
Compared with three months ago, manufacturers' and service-sector firms' sentiment indexes worsened by three points and seven points, respectively.
The BOJ tankan last month found that confidence among Japan's big manufacturers had hit the lowest in nearly three years and was seen worsening in the coming quarter.