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Japanese Bank Lending Falls

June 8, 2000

TOKYO (AP) _ Japanese banks loaned less money in May as the nation’s debt-saddled lenders remained reluctant to extend credit amid the nation’s prolonged economic slump, the Bank of Japan said Thursday.

Lending by Japanese banks fell 4.7 percent in May compared with the same month last year, more than the 4.2 percent on-year drop recorded in April, the central bank said. It was the 29th-straight month of decline.

The figure, however, came amid other modest signs that Japan is recovering from its worst economic slump in decades.

The government said Wednesday that capital spending by Japanese corporations rose 3.3 percent on-year in the January-March quarter, the first increase in more than two years.

The robust corporate spending figure prompted several brokerage houses to boost their gross domestic product projections for the January-March period. GDP _ the sum of all goods and services produced in the economy _ is expected to show a gain for the first time in three quarters.

Japan’s Finance Ministry is scheduled to release GDP figures Friday.

Even so, Japanese officials have said that while some signs of an economic recovery led by consumer demand have appeared, the government must still pour money into companies and currency markets to prop up the world’s second-largest economy.

Separately, the BOJ said Thursday that wholesale prices in Japan rose a less-than-expected 0.3 percent in May from May 1999. Economists had on average forecast a 0.4 percent rise.

The wholesale price data is being watched by financial markets for an indication when the government might raise interest rates, now near zero percent.

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