Confidence at large Japanese manufacturers fell unexpectedly for the first time in four quarters amid concern about high energy costs and the prospect of rising interest rates, a key survey shows today.

The report, however, did little to dent investor confidence that the world's number two economy is finally on the road to recovery, with Japanese share prices climbing to a fresh five-year high.

The Bank of Japan's Tankan survey, the first since the central bank ended its deflation-fighting monetary policy, showed a drop in the headline index of sentiment among big manufacturers to +20 in March from +21 in December. The market had been anticipating a rise to +23 as Asia's largest economy awakens from its decade-long slumber.

The index is still well up from a low of -38 seen four years ago but below a 13-year high of +26 seen in September 2004.

Large non-manufacturers fared slightly better, with confidence edging up to +18 in March from +17 in December. A positive reading means that confident firms outweigh pessimistic ones. Across all companies, sentiment was unchanged at +5, with medium-sized firms growing more upbeat.

Looking ahead, the index for large manufacturers is expected to rise two points to +22 in the June Tankan survey of more than 10,000 companies, while that for large non-manufacturers is seen gaining one point to +19.

Economists said the overall report still pointed to a robust economy, with rising spending by firms and consumers helping to keep the recovery on track. Japanese companies are facing high energy bills due to soaring prices for crude oil, while the central bank is expected to begin raising interest rates later this year, increasing firms' borrowing costs.