MNI POLICY: Japan Oct Factory Output Rise Supports BOJ View

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

rise in two months in October, supporting the Bank of Japan view that production

is returning to a moderate recovery path after the weak third quarter.

     However, BOJ officials are reserving their optimism over the outlook for

industrial production, as they remain focused on quarter-on-quarter moves to

examine the underlying trend.

     Production in October rose 2.9% from September for the first month-on-month

rise in two months and follows a 0.4% fall in September, according to

preliminary data released Friday by the Ministry of Economy, Trade and Industry

(METI).

     The increase was led by general-purpose, production and business oriented

machinery, electronic parts and devices, and motor vehicles.

     METI upgraded its assessment from the previous month, saying, "production

is picking up moderately." The previous assessment was "While production is

picking up moderately, there are signs of weaknesses in some areas."

     The BOJ will likely maintain the view "industrial production has been on an

increasing trend" at the December 19-20 policy meeting, with officials focused

on how overseas demand for capital investment remains solid, which in turn will

support Japan's exports of capital goods excluding transportation equipment.

--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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