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Last Updated: Friday, 10 November 2006, 10:53 GMT
Japan economy concerns hit shares
Japanese production line worker
A drop in corporate spending on machinery was unexpected
Japan's Nikkei index fell to its lowest level in a month on Friday after data sparked concerns about the economy.

An unexpected fall in machinery orders - a key gauge of corporate spending - pushed Toyko's leading Nikkei 225 index 0.53% lower to 16,112.43.

It followed news that the rate of lending slowed in October - suggesting a slowing of economic activity.

But the Bank of Japan governor hinted that recovery was continuing and that he wanted interest rates to rise.

Toshiko Fukui said that rate rises would be introduced gradually - but that they had to move soon to fend off inflation.

The bank left rates unchanged at 0.25% in October, after raising them for the first time in six years in July.

Upbeat on exports

Japanese machinery orders fell by 7.4% in September from August, the Cabinet Office said reported.

On a three-month basis, machinery orders fell by 11.1% in the July-to-September period, from the previous three months.

Mr Fukui said he was generally upbeat about Japan's recovery - adding that weaker US growth had so far had a limited impact on the Japanese economy.

"Despite a slowdown in the US economy, there has been little adverse impact on Japanese exports to overseas countries - to be exact, exports to the US," he said.


SEE ALSO
Bank of Japan hints at rate raise
07 Nov 06 |  Business
Fresh wobble for Japan's economy
31 Oct 06 |  Business
Japanese industrial output slows
30 Oct 06 |  Business
Japan may raise rates by year end
13 Sep 06 |  Business
Japan pegs interest rate at 0.25%
11 Aug 06 |  Business

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