TOKYO: A contraction of Japan's economy in the second quarter of 2007, due to a cut in spending on new factories and equipment, has done little to ease global financial jitters.

GDP shrank by 0.3% in the three months to June from the previous quarter and by 1.2% on an annualised basis, according to the Cabinet Office.

The slide was the first in three quarters for Japan, which has been slowly climbing out of its 1990s doldrums.

Taro Saito, a senior economist at NLI Research Institute, says the economy should return to positive growth in Q3 but the pace may be sluggish due to weakness in the US.

Data sourced from BBC Online; additional content by WARC staff