We are seeing from this tankan that a bottom is on the horizon

Shuji Shirota, Dresdner Kleinwort Wasserstein

The survey of more than 8,500 companies showed sentiment unchanged since December - bringing an end to five consecutive quarters of falls but worse than expectations of a modest improvement.

Leading Tokyo stocks ended virtually unchanged after spending much of the day in negative territory while the price of government bonds dipped and the yen slipped against the dollar.

Growing consensus

The tankan's headline figure came in at minus 38, with a negative figure indicating those pessimistic about business conditions outnumbered optimists.

The survey also suggested that big Japanese companies planned to cut spending on plant and equipment by a greater-than-expected 8.4% in the new financial year.

On a less gloomy note, the survey did reveal manufacturers were more optimistic about prospects in June, saying they hoped recovery in the US economy would lead to a rise in Japanese exports.

"We are seeing from this tankan that a bottom is on the horizon," said Shuji Shirota, economist at Dresdner Kleinwort Wasserstein in Tokyo.

Minako Iida, economist at Deutsche Securities in Tokyo said there was now a "growing consensus" that January-March to April-June would be the bottom of the economic cycle.

The Nikkei 225 index ended at 11,028.7, up 0.03%, while the yen fell to 133.15 to the dollar against 132.95 before the tankan was released.