While Japan's Reuters Tankan manufacturing index held steady in October, sentiment remained subdued

　　Business sentiment among Japan's big manufacturers was dampened in October as global economic weakness offset optimism in domestic demand, a Reuters poll showed, despite a slight pick-up in sentiment in the services sector. The prospect of higher US interest rates has weakened the yen and fears of soaring oil prices have weighed on sentiment.

　　All in all, downside risks to the global economy have undermined confidence in Japan's trade-dependent economy.

　　The tankan, a quarterly survey tracking the Bank of Japan, showed manufacturing sentiment was flat at 4 points in October but is expected to edge up over the next three months. The services index rose to 24, a slight improvement from 23 the previous month. The sentiment index fell to 20, underscoring the fragility of business confidence.

　　A manager at an industrial ceramics manufacturer said: "Our business conditions are not so good, as the recovery of car production has been hindered and China's overall economic slowdown has affected us. The outlook is highly uncertain."

　　Of the 502 large and medium-sized companies polled by Reuters, 249 responded, with many complaining of rising costs of doing business due to soaring raw material prices, exacerbated by a weak yen.

　　The survey showed business confidence improved in the third quarter compared with a short-term report released by the Bank of Japan on Oct. 2, suggesting that conditions for a durable economic recovery are taking shape despite a global slowdown that has policymakers cautious about the outlook.