TOKYO, Feb. 14 (Xinhua) -- A strong fourth-quarter growth has failed to raise Japan's outlook for economic expansion amid widespread pessimism from the U.S. credit crisis and officials still warned against a murky future.

    While acknowledging an "unexpectedly strong" growth, economic and fiscal policy minister Hiroko Ota warned against "downside risks" for the economic prospects Thursday.

    "We will closely watch developments in the U.S. economy, oil prices and Japanese housing investment," Ota told reporters.

    Earlier in the day, the Cabinet Office said Japan's economy, the world's second largest, grew at an annual rate of 3.7 percent during the October-December quarter, far exceeding the average market forecast of an 1.5 percent rise in a Kyodo News survey.

    The main driver for growth in the period was a surge in corporate capital investment, which rose 2.9 percent from the previous quarter.

    Japan's economy was "confirmed to be following a recovery trend in the October-December period," Ota said. Automakers introducing new vehicle models have been responsible for large part of the growth, she said.

    The government initially forecast a 2.1-percent growth for the fiscal 2007 through March 31, but later revised it to 1.3 percent due to repercussions from stricter building regulations introducedlast June.

    With the GDP data released for the first nine months of fiscal 2007, the government is now confident that the nation's economy will be able to achieve the 1.3-percent projection.

    Cheered by the robust growth, Tokyo stocks also surged more than 4 percent Thursday.

    The benchmark Nikkei Stock Average gained 558.15 points, or 4.27 percent from Wednesday, to close at 13,626.45. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 47.09 points, or 3.66 percent, to 1,332.44.

    However, analysts remained cool-minded and refrained from giving a rosy prospect for future growth. The robust GDP data in the fourth quarter is "broadly defined as export-led growth," Kyodo News Agency cited a senior economist as saying.

    Japan's economy could be slowing down in the January-March period due to projected dips in industrial output and exports, said Tatsushi Shikano, an economist with Mitsubishi UFJ SecuritiesCo..

    "If the growth in emerging economies slows and their demand fails to cover declines in Japan's U.S.-bound shipment, the country's exports would be affected and spark negative economic developments," Shikano said

    Many experts are warning against a ripple effect across Asia and the world at large in the wake of the housing and credit crisis in the United States.

    Battered by the credit crunch, the U.S. economic growth slowed abruptly to a 0.6-percent annualized crawl in the fourth quarter of 2007 compared with 4.9 percent in the prior quarter, official U.S. data showed.

    Some economists believe the U.S. economy is already in a recession and many fear a global slowdown. The issue has topped the agenda of the world's most important economic gatherings, including the World Economic Forum in Davos, Switzerland, last month and the Group of Seven (G7) finance ministers and central bank chiefs meeting in Tokyo on Saturday.

    The world "confronts a more challenging and uncertain environment than" when they last met in October, said the financial chiefs from the world's seven richest countries -- Britain, Canada, France, Germany, Italy, Japan and the United States.

    Countries with close economic links to the United States are the first to feel the pinches, and Singapore on Thursday downgraded its economic growth prospect to 4.0-6.0 percent from the previous 4.5-6.5 percent.

    On an annualized quarter-on-quarter basis, the Southeast Asia's most advanced economy shrank 4.8 percent in the fourth quarter of 2007.

Minister: Japanese economy under rising downside risks

   TOKYO, Feb. 14 (Xinhua) -- Japanese senior economic affairs official warned on Thursday of slowdown of the Japanese economy as the government released stronger-than-expected GDP growth for the fourth quarter of 2007.

    While confirming the nation's economy was "unexpectedly strong" and will steadily march in the track of recovery, economic and fiscal policy minister Hiroko Ota warned that the world's second-largest economy is under mounting risks of recession. Full story

Nikkei stock up over 550 points

   TOKYO, Feb. 14 (Xinhua) -- The Nikkei stock index surged over 4 percent with a gain of over 550 points on Thursday.

    The 225-issue Nikkei Stock Average jumped 558.15 points, or 4.27 percent, from Wednesday to 13,626.45, posting the sharpest point gain since mid-September of last year. Full story