Tokyo — Japanese business sentiment worsened for the first time in two years in the quarter to March, a central bank survey showed on Monday, as rising raw materials and labour costs weigh on an otherwise steady economic recovery. A strong yen and simmering fears of a trade war, triggered by US President Donald Trump’s move to impose tariffs on Chinese goods, could further undermine corporate morale if threats of retaliation escalate, analysts say. But few analysts expect the economic recovery to falter as confidence remains at a decade-high and companies plan to increase capital expenditure. "Yen gains since late January have eroded manufacturers’ sentiment, but solid global economic fundamentals helped offset the pain. Overall, you can say business confidence held firm," said Yuichiro Nagai, a Barclays Securities economist. "Fears of a global trade war have had a limited impact on business sentiment so far. But depending on development of US trade policy, protectionism could weigh...

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