REPEAT: MNI 5 THINGS: Japan Mar Sentiment But Trade War Feared

--Japan Mar Economy Watchers Current Index 48.9; Feb 48.6

--Japan Mar Watchers Outlook Index 49.6; Feb 51.4

--Govt Official: Stocks, Yen, Trade War Fear Cloud Sentiment

--Govt Keeps View: Moderate Economic Recovery Continues

By Max Sato

     TOKYO (MNI) - Unusually mild weather in March led to a slight rebound in

sentiment for retailers and the tourism industry but the combination of volatile

financial markets and fears of a U.S.-China trade war hurt future confidence

among many sectors, a key government survey conducted from Mar. 25 to Mar. 31

and released Monday showed.

     * The Economy Watchers Survey sentiment index for Japan's current economic

climate, which is closely monitored by government and central bank policymakers,

rose 0.3 point to 48.9 in March on a seasonally adjusted basis after falling 1.3

points to a 10-month low of 48.6 in February. 

     It was the first month-on-month rise in four months in confidence but the

index stayed below the key level of 50.

     * After the severe winter weather in the first two months of the year, the

temperatures rose sharply to early summer levels in some regions, prompting

people to go shopping and spend more time on leisure.

     * By contrast, the Economy Watchers outlook index showed sentiment about

the situation two to three months ahead marked the fifth straight month-on-month

decline, falling 1.8 point to 49.6 in March from 51.4 in February, as stock

markets remained volatile and the yen appreciated amid concerns about heightened

tension between the U.S. and its trading partners.

     "The outlook sentiment was heard by the recent development in the stock and

currency markets. There were also wide-spread concerns about the U.S.-China

trade conflict and the protectionist sentiment," Shigeru Hirota, Cabinet Office

director of regional economies, told reporters. "As the prices for beer and some

food were scheduled to rise in April, some Watchers feared that wage hikes would

not catch up with rising prices."

     * The outlook index slipped to the lowest level since April 2017, when it

was at 49.5. The 1.8-point drop was the largest since the 5.2% plunge in June

2016, when sentiment was hit hard by the yen's rise and the drop in domestic

stocks in light of Britain's decision to leave the European Union.

     "But the decline in March is not so sharp and the level of the outlook

index is higher than in June 2016," Hirota said.

     * The Cabinet Office maintained its overall economic assessment based on

the Economy Watchers Survey, saying, "The gradual recovery trend continues." It

left out its reference to bad weather factors, which made the recovery stall

temporarily.

     "Looking ahead, there remain expectations for orders and business

investment, although there are concerns over labor shortages, rising costs and

overseas developments," the Cabinet Office said, adding the wide-spread concerns

about the protectionist sentiment in the U.S. and retaliatory action by China.

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com