Japanese machinery orders rose less than expected in April from March, doing little to dispel worries that corporate capital spending may be losing steam.
The data also did little to ease market speculation that the Bank of Japan could raise rates in August, with euroyen futures falling to a 10-year low and the benchmark 10-year bond yield hitting a 10-month high after the numbers.
Separate data put out by the Bank of Japan showed that bank lending rose 0.9% in May from a year earlier, the same pace of growth as in April.
Core private-sector machinery orders, a highly volatile series regarded as a leading indicator of capital spending, rose 2.2% in April from the previous month, government data showed on Friday.
That was a slower pace of increase than economists' median forecast for a 4.5% rise and followed a 4.5% decline in March.
"Orders didn't bounce back as strongly as we expected from their sharp declines in February and March. The trend for capital spending isn't very strong," said Noriaki Haseyama, an economist at Dai-ichi Life Research Institute. "But other data on capital expenditure has not been that weak, so I think corporate spending will remain firm," he said.
The data hurt share prices, with Tokyo's Nikkei 225 Average falling sharply in the morning session.
But a sharp overnight rise in U.S. Treasuries yields sent the benchmark 10-year Japanese government bond yields up to 1.920%, a 10-month high. The lead December euroyen futures fell to a 10-year low below 98.930, down five basis points on the day, after the data's release.
Compared with a year earlier, core orders, which exclude those for ships and machinery at electric power firms, fell 9.0% in April, against a median forecast for a 7.1% decline.
The machinery orders data last month showed manufacturers were expecting orders to fall 11.8% in April-June from the previous quarter, fueling concerns about slowing growth in capital expenditure.
But other recent data has suggested that capital spending -- a major engine of the economy -- is holding up well.
A corporate survey released by the Ministry of Finance on Monday showed capital spending grew more than expected in January-March to mark a record high, bolstering expectations of a rate hike in August.
The BOJ has said it will need to gradually raise interest rates from current low levels in line with the nation's steady economic expansion, already the longest in the postwar era.
Many market players now expect the BOJ to raise rates in August. The central bank raised the key interest rate to a decade-high 0.50% from 0.25% in February, following its first rate hike in six years last July.