Japanese business confidence is at a two-year high, strengthening hopes of an upturn in the nation’s long-suffering economy.

The quarterly Tankan survey of business sentiment among big corporations jumped from minus 10 to minus 5 for the three months to June. Even though this is the tenth consecutive quarter in which the index has been negative, the rise pushed the Nikkei 225 index up 2.15% to 9,278.49, its highest in nine months.

Explaining the increase, analysts cited the end of the war in Iraq, a rise in exports (especially to the US), the decline of the SARS outbreak and improvements in the world’s stock markets.

However, there remain worrying signs. Despite the rise in the headline index, the survey showed greater pessimism among smaller firms, and the component measuring future expectations was unchanged.

Data sourced from: BBC Online Business News (UK); additional content by WARC staff