Japan factory output up, firms expect recovery

Separate data published on Thursday showed Japanese manufacturing activity contracted in January, but the pace of contraction slowed for the first time in four months as the country slowly recovers from an export-led slump.

Japanese wage earners' total cash earnings fell 1.4 percent in December from a year earlier, taking average monthly earnings in 2012 to their lowest level since comparable data became available in 1990, government data showed.

Analysts expect Japan's economy will grow moderately this year as exports recover, led by a rebound in the global economy, while Abe's aggressive monetary and fiscal policy may also help boost the economy.

His ambitious "Abenomics" strategy has sent the yen to a 2-1/2 year low against the dollar.

Under relentless pressure, the BOJ last week doubled its inflation target to 2 percent and pledged an open-ended commitment to buying assets next year to help beat deflation.

Earlier this month, the government compiled a 10.3 trillion yen ($114.5 billion) economic stimulus package as part of Abe's plans to revive the economy.

But in a $1.02 trillion draft budget for the next fiscal year approved on Tuesday, the government aims to keep new bond sales below tax revenues in a symbolic move to show its resolve to continue with efforts to fix Japan's tattered finances.