Manufacturers39; Feb sentiment index 1 vs Jan 6
Servicesector index 26, down 3 points from Jan
Manufacturers39; mood seen rebounding, servicesector down
Reuters Tankan closely correlates with BOJ tankan

TOKYO, Feb 21 Reuters Japanese manufacturers39; business morale soured sharply in February with pessimists outnumbering optimists for the first time in 10 months, the Reuters Tankan survey found, adding to concerns about further economic decline.

The monthly poll, which closely tracks the Bank of Japan39;s BOJ quarterly tankan, follows data last week that showed Japan unexpectedly tipping into recession in the fourth quarter and losing its spot as the world39;s thirdlargest economy to Germany.

The loss of business confidence raises worries Japanese firms may become reluctant to boost wages enough to achieve stable and sustainable inflation in a country that has been mired in a deflationary mindset for more than a decade.

Speculation is rife that the Bank of Japan may exit its negative interest rates policy as early as March or April, if wage and price growth picks up enough.

The Reuters Tankan is among various data points the BOJ closely scrutinises in making such assessments.

The poll of 499 big nonfinancial Japanese firms found that manufacturers39; sentiment tumbled to minus 1 in February from the prior month39;s plus 6, the first negative reading since last April. The index is seen rebounding to plus 6 in May.

The Reuters Tankan indexes are calculated by…