TOKYO, Oct 14 - The Bank of Japan upgraded its assessment of the economy for the second month in a row in a report issued on Tuesday, supporting recent signs of a nascent recovery. "Looking at the economy, the foundations for a gradual economic recovery are emerging as the export environment improves and business sentiment brightens," it said in its October economic report. But it saw uncertainties on the outlook for exports such as the recent rise in the yen and said more time was needed for domestic demand to recover on its own. The BOJ's Policy Board eased monetary policy last week amid concerns that a recent strengthening of the yen could choke off the economy's export-led recovery. BOJ Governor Toshihiko Fukui stressed that the step was aimed at ensuring the recovery stayed on track.//