Japan business confidence index unchanged

TOKYO, July 2 (UPI) -- The index of business confidence among major Japanese manufacturers was unchanged in the quarter ended June, pointing to a likely interest rate hike.

The closely-watched Tankan survey by the Bank of Japan, released Monday, said the business sentiment index stood at 23, unchanged from the previous quarter, Kyodo news service reported. In the quarter ended December the index was 25.

Many economists have said they expect the central bank to raise the benchmark short-term interest rate to 0.75 percent from the current 0.5 percent in a credit-tightening move during its Aug. 22 policy meeting, and that the latest numbers may only reinforce that thinking, the report said.

The economists also expect the index for the next quarter to drop to 22.

The survey said large companies in all industries plan to spend 7.7 percent more on plant and equipment in fiscal 2007 through next March, than in fiscal 2006.