Japan gets more upbeat

Japan's central bank today upgraded its outlook on the world's second-largest economy and held interest rates at just 0.1%.

The Bank of Japan said "economic conditions are showing signs of recovery" and that the economy has "stopped worsening".

The bank said a rebound in exports and public spending is underpinning the recovery.

It said risks remain from weak consumer spending and surging unemployment. Japan saw its first quarter of growth in the April-June period after a year-long contraction, but the jobless rate has reached a record high of 5.7 percent, and ­salaries are falling.

Prices have also been waning, setting off worries about deflation, which could ­further sap energy from the ­economy.

The Bank of Japan's quarterly "tankan" survey of business ­sentiment, set to be released next month, is expected to show tough times are far from over for ­Japanese companies, amid fragile domestic demand.