TOKYO - Confidence among recession-hit Japanese manufacturers remains near record lows, a Reuters poll indicated on Tuesday, and service-sector sentiment also showed buyers at home and abroad were losing faith.
With the world's second-largest economy stuck in its worst contraction in a generation, the Reuters Tankan monthly poll provided more evidence of a deepening recession as demand crumbles and companies cut jobs.
The survey was released on the day US President Barack Obama is to sign his $787 billion stimulus package, a plan his new administration hopes will save or create 3.5 million jobs.
It also came as US Secretary of State Hillary Clinton began talks with Japanese officials in Tokyo that would include ways to cope with the global crisis as fears rise of a return to 1930s-style protectionism in the United States.
She said the global crisis demanded a coordinated response.
Obama's plan, and a bank bailout that could top $2 billion, are meant to address a recession he inherited after US housing and credit markets collapsed, dragging European and Asian economies into recession.
Japan has suffered a sharper contraction than other major economies because of its heavy dependence on exports combined with persistently soft domestic demand.
Those factors were echoed in fourth quarter GDP data released on Monday which showed Japan's economy shrank by 3.3 percent, its worst result since the first oil crisis in 1974.
Japan's woes were exacerbated by the scandal surrounding Finance Minister Shoichi Nakagawa over his embarrassing performance at a G7 meeting in Rome at the weekend. Nakagawa said he would resign after Japan's budget passes.
The Reuters Tankan, a monthly poll of 214 firms that tracks the Bank of Japan's tankan survey, showed most respondents remained pessimistic even though they expect a slight improvement in business conditions in the next three months.
Manufacturers' sentiment edged up to minus 74 in February, up two points from the previous month, which had marked the lowest since the survey began in June 1998.
Sentiment among electric machinery and autos/transport equipment sectors -- two of Japan's leading industries -- rose by the same amount but confidence among non-manufacturers worsened by 8 points to a record low of minus 39.
Australia's central bank said the global recession would depress the economy in coming months but hoped bold interest rate cuts and the biggest stimulus plan in the country's history would lead to stronger demand later this year.
Australia has so far avoided following the United States, Japan and European economies into recession but has cut rates to record lows and this month launched a $42 billion ($27.3 billion) stimulus plan of infrastructure spending and income support.
"This stimulus would take time to be effective and could be expected to have only a modest effect on the near term outlook in Australia," the Reserve Bank of Australia said in minutes from its Feb. 3 policy meeting released on Tuesday.
"Given the speed at which the global contraction has occurred, short term prospects were thus still for weakness in demand and output," it said in comments echoing those by the Bank of England a day earlier.
The RBA has cut Australia's rates by 400 basis points since September to a record low of 3.25 percent, and markets are pricing in a further cut of 50 basis points next month.