TOKYO, Nov 11 - Japanese machinery orders fell in September from a month earlier, government data showed on Tuesday, putting a dampener on hopes that the economy was picking up momentum on the back of rising exports. The core private machinery orders, considered a forerunner of trends in capital spending, fell 1.6 percent from a month earlier on a seasonally adjusted basis. The figure, while volatile, was much worse than the median forecast for a 5.1 percent rise in a Reuters poll of 28 economists last week. The data comes ahead of Friday's announcement on third-quarter gross domestic product, which is expected to show the economy grew in July-September for the seventh straight quarter. Firm overseas demand, particularly from the recovering United States, has helped boost exports and output. The focus has been on whether and when this would filter through to domestic demand. "The (machinery orders) figures prove that any recovery will not be a rapid one and will come slowly," said Seiji Shiraishi, chief market economist at Daiwa Securities SMBC. After the data, the yen dipped slightly against the dollar, and Japanese government bond yields accelerated their decline. The dollar was back above 109 yen. The yield on the 10-year benchmark cash bond was down 14 basis points at 1.385 percent.
The Nikkei stock average was down more than three percent at 10,170, with sentiment damaged by a tumble in shares of Softbank, a favourite stock of individual investors. The machinery orders data failed to provide any help. The core machinery orders, which exclude those for ships and equipment at electric power firms, are regarded as a leading indicator of capital spending in the coming six to nine months. Compared with the same month last year, orders rose 0.6 percent, worse than a poll forecast for a gain of 7.7 percent. The government forecast October-December machinery orders to rise 12.0 percent from the previous quarter.//