New depths of gloom in Japan

Japan's largest manufacturers are at their gloomiest in four years as exporters struggle with a rising yen and collapsing consumer demand in the US.

The Tankan index of manufacturer sentiment slid to 11 points in March from 19 in December, the second quarterly decline in a row, the Bank of Japan said today.

Large companies said they plan to cut capital spending by 1.6% this year, the worst projection since the economy emerged from a recession in 2002.

The BoJ said last month it would take "flexible" steps if needed.

JPMorgan Chase says there is a 55% chance the bank will cut the key rate from 0.5% by December.

Toyota last month warned it may not meet sales targets because the rising yen was eroding competitiveness just as US consumers were tightening their belts.

The only glimmer of optimism in the Tankan came from large services companies, for whom the outlook index stood at 13.