BOJ keeps policy steady but cuts economic assessment

TOKYO, Oct 5 (Reuters) - The Bank of Japan kept monetary settings unchanged on Friday after having loosened policy only last month, but it cut its assessment of the economy due to weakening exports and production.

As widely expected, the central bank maintained its key policy rate in a range of zero to 0.1 percent by a unanimous vote, and held off on easing monetary policy further.

"Japan's economic activity is more or less levelling off," the BOJ said in a statement announcing its policy decision.

BOJ Governor Masaaki Shirakawa will hold an embargoed news conference later on Friday, with his comments expected to come out some time after 4:15 p.m. (0715 GMT).

The BOJ has expanded monetary stimulus three times so far this year through an increase in asset purchases including in September, as prospects of a near-term recovery in the world's third-largest economy have faded due to weakening exports and a prolonged slowdown in China.

(Reporting by Leika Kihara and Stanley White; Editing by Chris Gallagher)