Japanese firms step up spending

Japanese growth is likely to continue, albeit more slowly

Japanese companies have increased spending on equipment and production facilities in the three months to end-June, a government survey has shown.

The poll underlines an ongoing recovery in the world's second-largest economy and boosts optimism that growth targets for the period will be raised.

According to the Ministry of Finance, capital spending rose 10.7% in the second quarter from a year earlier.

It is the fifth-straight quarter of growth and the biggest jump since 2001.

Tokyo's benchmark Nikkei 225 index added 2.1% on Monday after the announcement.

"This is a sign that the economy remained firm during the April-June quarter," said Tetsuro Sawano, a strategist at Mitsubishi Securities.

Vital exports

Technology-related companies led the way in boosting spending, with computer software and chip makers benefiting from a pick up in global demand, the Ministry of Finance said.

Concerns were raised, however, about the potential impact of any slowdown in growth in countries including China, one of the main motors of the global economic recovery.

While analysts said that Japan is well placed, they added that expansion in the world's second largest economy was likely to slow.

A government report released last month showed gross domestic product (GDP) grew by less than expected during the second-quarter, while industrial production failed to expand for a second month in July.