Japanese business confidence edged up more than expected in the three months to December but remained negative for the sixth quarter in a row, a Bank of Japan survey showed, as the economy slowly recovers from its worst postwar recession.

The headline index for big manufacturers' sentiment was minus 24 in December, improving from minus 33 in the previous quarterly survey in September, the closely watched tankan survey showed on Monday.

That was better than the median market forecast of minus 27, pulling further away from a record low hit in March in the wake of the global financial crisis.

The index for next March was seen at minus 18, showing firms expect conditions to improve over the next three months, albeit at low levels. A negative figure means pessimists outnumber optimists.

The survey also showed big firms plan to cut their capital spending by 13.8 percent in the financial year to March 2010.

That is bigger than the market's median forecast for an 11.3 percent cut.

Japan's economy grew at a far slower pace in the third quarter than first thought as capital spending fell, but a double-dip recession is seen as unlikely as exports rebound and corporate spending shows signs of bottoming out.

(Reporting by Tetsushi Kajimoto and Stanley White)

Japan