Japan failures gathering pace

The Bank of Japan says business failures in the country are rising at their fastest in eight years as banks remain reluctant to lend to small and mid-sized firms.

An index of willingness to lend money to smaller companies was at five this month, unchanged from July and the lowest since the BoJ launched its survey in 2000.

Bankruptcies in September were led by construction and property companies. Policymakers are considering reviving a law that would allow them to pump public funds into ailing regional lenders.Small and medium-sized companies employ 70% of Japan's workforce but are now facing a vicious circle.

"Banks are reluctant to lend because of the worsening economy," said Yoshimasa Maruyama at BNP Paribas Securities in Tokyo.

Despite the survey, there was more cheerful news on the bond market today with benchmark 10-year yields climbing toward the highest in almost three months as the rates banks charge each other for loans fell.