Japanese firms' confidence dives to the lowest since 1974

The quarterly index, which measures confidence among large electronics firms and carmakers dropped to minus 24 from minus three, its biggest fall since 1974.

A negative number means pessimists outnumber optimists.

Exporters are reeling from the double whammy of a soaring yen that has overpriced their goods and a collapse in demand in key markets such as the US and Europe.

China, whose economy has contracted far more quickly had been anticipated, has contributed to Japanese manufacturers' problems.

"The overseas situation is worsening so quickly and so dramatically; it's really getting dangerous," said Tomoko Fujii, head of economics and strategy at Bank of America in Tokyo.

"The next few months are going to be a very severe period."

Bank of Japan Governor Masaaki Shirakawa and his colleagues will discuss the Tankan result at a policy meeting ending this week when they are expected to keep benchmark interest rates at 0.3%.

The 21-point decline in the large-manufacturer index equals the drop in February 1975. Only a 26-point drop during the first oil shock in August 1974 was larger.

Sentiment among carmakers plunged to minus 41 from five, the steepest drop ever.