UPDATE 2-Japan's exports, machine orders pick up as global demand recovers

    * Export growth broadly in line with expectations
    * Machinery orders unexpectedly rise
    * Manufacturers turn positive for 1st time since mid-2019
    * Q1 GDP seen contracting again on renewed COVID-19 curbs  

 (Adds analyst's quote, detail)
    By Tetsushi Kajimoto and Daniel Leussink
    TOKYO, Feb 17 (Reuters) - Japan's exports accelerated in
January, led by a jump in Chinese demand, and manufacturers'
sentiment turned positive for the first time since 2019
signalling a gradual recovery from last year's deep coronavirus
     Core machinery orders, a volatile but leading indicator of
capital spending, unexpectedly rose in December, an encouraging
sign for a private sector-led recovery, even as renewed curbs to
contain the pandemic weighed on business activity.
    Despite the upbeat indicators, however, analysts warn the
recovery momentum in the world's third-largest economy could
stall as policymakers struggle to balance the need to contain
the virus against the need to revive growth and fix Japan's dire
    "The economy's recovery is pausing in the current quarter,
although development of coronavirus vaccines may reduce risks
ahead," said Hiroshi Miyazaki, senior economist at Mitsubishi
UFJ Morgan Stanley Securities.
    "Uncertainty remains high for both exports and machinery
orders, as delays in vaccinations or resumption of activity
among the public on expectations for vaccines could heighten
risks of another wave of virus resurgence."
    The indicators followed fourth-quarter gross domestic
product data on Monday that showed Japan's economy grew more
than expected, as a fast-recovering Chinese economy helped boost
exports and capital expenditure.             
    Ministry of Finance data showed on Wednesday exports rose
6.4% in January from a year earlier, roughly in line with a 6.6%
increase seen by economists in a Reuters poll and following a
2.0% gain in December.
    By region, exports to China, Japan's largest trading
partner, jumped 37.5% in the year to January, the biggest gain
since April 2010, led by chip-making equipment, plastics and
nonferrous metal. The big gain is partly due to the base effect
of the large decline seen a year before when the Lunar New Year
holidays, which weighs on trade activity, fell in January, a
ministry official said.
    U.S.-bound shipments fell 4.8%, dragged down by airplanes,
motors and car parts.
    Reflecting soft domestic demand, imports fell 9.5% in the
year to January, versus the median estimate for a 6.0% drop,
swinging a trade balance to a deficit of 323.9 billion yen 
($3.05 billion).
    Analysts expect Japan's economy to contract in the current
quarter, as service consumption is hit hard by renewed state of
emergency curbs issued last month and set to last until March.
    Separate data by the Cabinet Office showed core machinery
orders, considered an indicator of capital spending for the next
six to nine months, rose 5.2% in December from the previous
month, versus a 6.2% drop expected.
    The government described machinery orders as picking up,
marking an upgrade for the third straight month from its
previous assessment that they were showing signs of a pick-up.
    Raising worries about the outlook, however, manufacturers
surveyed by the Cabinet Office expected core orders to fall 8.5%
in January-March, after advancing 16.8% in the previous quarter.
    Japanese manufacturers' morale turned positive for the first
time since July 2019 in February, the Reuters Tankan survey

($1 = 106.1000 yen)

 (Reporting by Tetsushi Kajimoto and Daniel Leussink; Editing by
Sam Holmes)