TOKYO (Reuters) - The Bank of Japan on Monday raised its assessment on exports and output but warned of risks to the economy from slowing Chinese growth and fallout from Europe's sovereign debt crisis.
"Exports are showing signs of a pickup" partly on solid U.S. automobile demand and are expected to increase moderately as overseas growth recovers, the central bank said in a monthly economic report for June.
Production is also picking up moderately and is seen posting slight quarterly increases in April-June and July-September as companies in the automobile, chemical and steel sectors begin to restock inventory, the report said.
The upbeat assessment compared with the previous month's view that export and output growth was flat.
Japan's economy is expected to outperform most of its G7 peers this year and grow around 2 percent, helped by robust private consumption and spending for rebuilding from last year's earthquake and tsunami.
That led the BOJ to keep monetary policy on hold last week and revise up its overall assessment of the economy to say it was picking up moderately, mainly on strength in domestic demand.
In the June report, the central bank maintained its forecast that Japan's economy will soon resume a recovery but removed a line saying that strength in emerging economies will drive global growth, signaling that the slowdown in Chinese demand could cloud the outlook for exports.
"Uncertainty over the course of the global economy remains high. Particular attention should be paid to how Europe's debt woes could affect global financial markets," the report said.
The BOJ announces its assessment of the economy on the same day as its policy decisions, and issues a more detailed assessment of each component of the economy in a monthly report usually released the following market day.
(Reporting by Leika Kihara; Editing by Kim Coghill)