The core private-sector machinery orders, which exclude particularly volatile demand from power companies and for ships, fell again after a 5.5 per cent rise in September following a 14.5 per cent fall in August.

The market's average forecast was for a decline of around 4.4 per cent.

Japan's corporate sector has been a key driver of a recovery in Asia's largest economy following the recessions of the 1990s.

But companies are now cutting back their investment in new plant and equipment in response to the global financial crisis.

Official figures on Tuesday showed that Japan's economy shrank 0.5 per cent in the three months to September - 1.8 per cent on an annualised basis - entering its first recession in seven years with a second straight quarter of negative growth.

An initial estimate last month had shown the Japanese economy shrank 0.1 per cent in the third quarter, and 0.4 per cent on an annualised basis.

The gloomy snapshot raised fears that the downturn will be deeper and longer than previously expected, which analysts said could prompt the central bank to cut interest rates again to almost zero. -- AFP