Business sentiment among large manufacturers fell for the third consecutive quarter amid increased fears of a global economic downturn, according to a key economic survey released Monday by the Bank of Japan.

Excessive inventory and slumping exports affected some of the nation's strongest companies, causing the diffusion index measuring corporate sentiment among major manufacturers to drop to minus 33, according to the "tankan" quarterly survey.

This marked a fall of 17 points from the previous quarter, the largest drop since March 1998. The diffusion index shows the percentage of companies that say business conditions are favorable minus those that feel conditions are poor.