Confidence among large Japanese manufacturers fell sharply in December to its lowest level since March 2010 amid strained ties with China over a territorial spat, the Bank of Japan's
Tankan survey showed Friday.
The index for the quarterly survey slid to minus 12 from minus 3 three months ago for the second-consecutive quarter of decline. A negative number indicates pessimists outnumber optimists.
The figure was worse than the average forecast of minus 10 predicted by economists in a poll conducted by the Kyodo News Agency.
The sharp fall dealt another blow to Prime Minister Yoshihiko Noda's ruling Democratic Party of Japan (DPJ) ahead of Sunday's general elections while Shinzo Abe - leader of the largest opposition party, the Liberal Democratic Party (LDP) - called for more economic stimulus and 'unlimited' monetary easing.
The LDP is leading in the polls, which forecast a crushing defeat for the DPJ.
The index of large non-manufacturers' sentiment dropped to plus 4 from plus 8, the central bank's survey showed.
Large manufacturers expected the index to edge up to minus 10 in the next quarter, the survey found.
Confidence among medium-sized manufacturers in the world's third-largest economy declined to minus 12 from minus 6 while the index for small manufacturers slipped to minus 18 from minus 14.
Large manufacturers and non-manufacturers planned to raise capital investment by 6.8 per cent in the current financial year, which ends March 31. That figure was higher than the 6.4-per-cent rise posted in
the September survey, the bank said.