Summary The Nikkei rose 10 percent over the first three months of the year.
TOKYO (AFP) - Tokyo stocks fell 0.89 percent Wednesday morning as investors reacted to a disappointing business confidence survey that showed Japanese firms are increasingly pessimistic about a rebound in the world s number three economy.
The Nikkei 225 index at the Tokyo Stock Exchange slipped 171.36 points to 19,035.63 by the break, while the broader Topix index of all first-section shares gave up 1.08 percent, or 16.74 points, to 1,526.37.
Shortly before markets opened, the Bank of Japan s quarterly Tankan survey showed confidence among large manufacturers stood at plus 12 in March, flat from the previous report and missing expectations that it would come in at 14.
The survey of more than 10,000 companies -- which shows the difference between the percentage of firms that are optimistic and those that see conditions as unfavourable -- is the most comprehensive indicator of how Japan Inc. is faring.
The report comes after a slate of weak data underscored the fragility of Japan s economy and suggests firms are cautious about a recovery, although sentiment among non-manufacturers was more upbeat.
"(The report) was quite weak and the outlook remains cautious," said Kenji Ueno, a senior investment manager at Sompo Japan Nipponkoa Asset Management.
"Stocks have done very well this year, but it seems the actual economy is still not able to surprise us positively."
The Nikkei rose 10 percent over the first three months of the year.
But "the view that Japanese stocks are relatively cheap seems to be retreating," Hiroichi Nishi, an equities manager at SMBC Nikko Securities, told Bloomberg News.
Investors are awaiting the "big events later this week, such as US payrolls," he added.
In Asian forex trading, the dollar slipped to 119.57 yen Wednesday from 120.06 yen in New York, where it got a boost from a positive American consumer confidence report.
A stronger yen is negative for Japanese exporters as it makes them less competitive abroad and shrinks the value of repatriated overseas profits.
Toyota shares fell 1.87 percent to 8,226.0 yen, mobile carrier SoftBank was down 0.59 percent at 6,939.0 yen, while Japan s biggest bank Mitsubishi UFJ fell 0.54 percent to 739.7 yen.
Bucking the market s fall into negative territory, heavyweight Fast Retailing, operator of the Uniqlo clothing chain, rose 1.08 percent to 46,995.0 yen.
On Wall Street, the Dow Jones Industrial Average sank 1.11 percent, the S&P 500 fell 0.88 percent, while the Nasdaq dropped 0.94 percent.
