Business confidence in Japan worsened for the second consecutive quarter in the October-December term, reflecting heightened geopolitical tensions and sluggish domestic stock performance, according to a government survey released Thursday.

The Cabinet Office survey showed the business sentiment index had worsened to minus 23 in the latest reporting quarter from minus 22 in the July-September period.

The BSI measures corporate managers’ confidence in the economy by subtracting the percentage of those who predict it will worsen from those who say otherwise.

In the previous survey, conducted in September, the index was forecast to improve to minus 15.

The index remained in negative territory for the eighth straight quarter.

The drop in confidence was largely due to corporate managers’ increased worries regarding the economy, a senior Cabinet Office official said, adding there is a need to monitor developments more closely.

The survey released Thursday forecasts the BSI for both the January-March and April-June quarters at minus 19.

The previous survey had projected the January-March term figure at minus 1.

The official said the latest survey showed corporate managers are uneasy about external demand in the coming quarters as they feel the looming U.S. military offensive against Iraq would negatively affect overseas economies.

The survey, conducted Dec. 25, covered 4,561 firms capitalized at 100 million yen or more, of which 4,161, or 91.2 percent, responded.

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