MNI POLICY: Japan Feb Output Rebounds But BOJ Caution Remains

     TOKYO (MNI) - Japan's industrial production posted the first month-on-month

rise in four months in February but the gain was weak compared with the drop

over the past three months, with the Bank of Japan maintaining its cautious view

on the outlook.

     February industrial production, a key piece of analytical data for BOJ

economists, rose 1.4% on month following falls of 3.4% in January, 0.1% in

December and -.0% in November, preliminary data released Friday by the Ministry

of Economy, Trade and Industry showed.

     February's rise, above than the MNI median forecast of a 1.0% gain, was due

mainly to higher output of motor vehicles, information and communication

electronics equipment and general-purpose, production and business oriented

machinery.

     In a statement, METI left its assessment from last month, saying that

"production is marking time," for the second straight month. The government

downgraded its assessment when the January data was released. It previously

said, "production is picking up moderately."

     Based on its survey of manufacturers, METI projected that industrial

production would rise 1.3% on month in March (revised from -1.6% forecast last

month) and rise 1.1% in April.

     Adjusting the upward bias in output plans, METI forecast production would

rise just 0.4% on month in March.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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