May 31 - Tokyo stocks lead Asian markets higher after Japanese manufacturers signal they are cranking up production; hinting at possible V-shaped recovery for Japan's economy. Arnold Gay reports.
NOTE: THIS EDIT CONTAINS CONVERTED 4 BY 3 MATERIAL Tokyo stocks led Asian equity markets higher Tuesday (May 31) after Japanese manufacturers signaled they were cranking up production. After a record 15.5 percent plunge in March, Japan's industrial output rose 1 percent in April. But the real spur came from predictions of an 8 percent rise in output for May, and 7.7 percent in June. These numbers would bring factory output near pre-quake levels, and suggest manufacturers are making good progress in restoring supply networks torn apart by the earthquake disaster. This in turn suggests the Japanese economy could enjoy a V-shaped recovery after the crisis. But rating agency Moody's put the country on review for a possible downgrade, saying it's concerned over the policy response to "faltering economic growth prospects". Some economists do cite on-going political risks, with Prime Minister Naoto Kan facing a no-confidence vote as soon as this week that could impede cooperation with the opposition to approve special spending needs. Summer power outages and weak consumer demand are further potential hurdles that may hamper Japan's longer term growth prospects. Arnold Gay, Reuters