TOKYO (AP) -- A closely watched Bank of Japan survey showed Friday that confidence at major Japanese companies fell from three months ago, dampening expectations of an imminent interest rate hike amid continued subprime loan woes.

The quarterly "tankan" survey, which polls more than 10,000 companies nationwide, showed that the sentiment index for large manufacturers stood at 19, down from 23 in the previous survey in September. That was below the 21 mark forecast in a Dow Jones Newswires poll of economists.

A similar index for large non-manufacturers also dipped to 16 from 20, also below a forecast of 18.

The weak results are expected to stoke concerns that the fallout from the U.S. credit market crisis is still hurting Japan's economy.

The dip in confidence also cemented expectations that the central bank will hold off from raising a key interest rate at its policy meeting next week.

The indexes subtract the percentage of companies saying business conditions are bad from the percentage of those saying they are good, so the higher the number the greater the portion of optimistic companies.

The tankan survey showed that major companies plan to boost capital investment by 10.5 percent in fiscal 2007, higher than the 8.7 percent increase in September's estimate.

BRUSSELS, Belgium (AP) -- The EU's top court should back a ruling that overturned regulatory approval for Sony Corp. and Bertelsmann AG's 2004 deal to combine their music units and form the world's second-largest record label, a legal adviser to the EU's highest court said Thursday.

In a legal opinion that is not binding on the European Court of Justice but is followed in most cases, Advocate General Juliane Kolkott said the court should uphold a decision made last year by the Court of First Instance that stripped away EU clearance to a business that was already up and running.

She said the CFI ruling had not laid down an excessively high standard for clearing the deal and the court had "rightly held" that regulators had not done enough to show that record prices could not be coordinated.

Kolkott did say the court was wrong to tell the EU's executive arm to look at the market again -- but this was not enough to throw out the entire judgment.

The deal between Sony Corp. and Bertelsmann Music Group brought artists like Shakira, George Michael, Avril Lavigne and Elvis Presley under one roof and joined up labels such as Arista, Jive, Epic and Columbia.

Independent record labels took their legal challenge to the EU appeals court, the Court of First Instance, which agreed with them by criticizing regulators, saying they had not done enough to prove the combination would not lead to a joint monopoly in the record industry and players would not coordinate prices.

The EU's executive arm was forced to examine the deal a second time, using more recent information on the sector and clearing it in October, claiming mountains of new evidence to prove that the two companies would not damage the music scene by combining and shrinking the number of major music companies from five to four.

It said it failed to find any evidence of collusion to back up complaints that record labels coordinated their budgets, prices for chart albums and others, overall pricing policies, release dates, access to retailers and airplay as well as how they calculated how well an album charted.

It had looked at how that affected retail, discount and wholesale prices for all CD chart albums sold by Sony BMG and rivals Vivendi SA's Universal Music Group, EMI Group PLC and Warner Music Group PLC in Europe between 2002 and 2006 -- and examined licensing for Internet downloads of albums since 2004.

BMG was a branch of Germany's Bertelsmann AG, an international media group with interests in broadcasting, book and magazine publishing. It joined with the Japanese electronics and entertainment giant Sony in 2004, saying they needed to combine forces to deal with declining CD sales and the threat of declining record sales as illegal Internet downloads surged.

TOKYO (AP) -- Japan Airlines' chairman announced his resignation Friday to make room for younger leadership, saying he had seen the carrier through a successful turnaround.

The company reported Friday a 13.1 billion yen (US$122 million) profit in the October-December quarter, reversing a 10.8 billion yen loss from the same quarter the previous year. It was the second straight quarterly profit after more than two years of losses.

Japan's biggest airline, known as JAL, has worked hard to improve its fortunes, cutting staff, dropping unprofitable routes and shifting to fuel-efficient aircraft.

Toshiyuki Shinmachi, 65, told a board meeting he will quit March 31, having seen the company get on track to profit, according to JAL. The move is also an effort to rejuvenate managerial ranks, it said.

Shinmachi, who became president in 2004, took office as chairman in 2006, partly to take responsibility for the airlines' faltering finances and a spate of safety problems. The chairman's seat will be left vacant, JAL said.

JAL has been struggling in recent years, hurt by a rising fuel bill, costly early retirement packages and a tarnished image from a series of safety lapses. The airline has been trying to regain customer confidence after Japanese passengers have instead opted for rival All Nippon Airways.

Japan Airlines Corp. swung into the black in the July-September quarter of 2007 after losing money in the fiscal first quarter and the previous two straight fiscal years.

Sales for the quarter ended Dec. 31 declined 4.4 percent to 558.2 billion yen (US$5.2 billion) partly because of the sale of a part of Japan Airlines' stakes in a trading company called JALUX.

JAL said international travel to China, Vietnam and India was strong in recent months, offsetting a gradual decline on previously popular routes such as Europe and Hawaii, which are now less popular because of the declining yen.

Adding to its bottom line in October-December were cuts in expenses, which decreased 65.8 billion yen (US$613 million) from a year earlier. Quarterly revenue from international flights rose 5.7 percent while revenue from domestic passengers and cargo declined slightly.

JAL left its forecast for the fiscal year through March at 7 billion yen (US$65.2 million) in profit on sales of 2.238 trillion yen (US$20.9 billion). In fiscal 2006, JAL had posted a 16.2 billion yen loss.

The management reshuffle in 2006 followed safety problems that began in 2005, and tarnished JAL's image, including wheels falling off during a landing and an engine that burst into flames.

The airline was reprimanded repeatedly by the government, but the errors continued, including a takeoff with a faulty latch and other problems. No one was injured.

Since then, JAL has stopped unprofitable routes and reorganized flights to decrease empty seats on flights.

For the April-December period, JAL earned profit of 20.4 billion yen (US$190.1 million), a marked improvement from the 9.3 billion yen loss the same period in 2006.

Sales for the first nine months of fiscal 2007 dropped 1.9 percent to 1.701 trillion yen (US$15.8 billion).

The airline said it reduced fuel costs by 13.3 billion yen (US$123.9 million), or 4 percent, in the first three quarters of fiscal 2007 from the previous fiscal year, thanks to fleet renewal, downsizing and route changes.

Foreign exchange fluctuations added a 12.1 billion yen (US$112.7 million) gain because of hedging and other measures, JAL said.

Last month, All Nippon Airways Co. reported a 33.9 percent jump in October-December profit to 12.4 billion yen (US$115.5 million) on robust international services and the sale of hotel assets.

JAL shares rose 2.7 percent to 264 yen (US$2.46) on the positive earnings news.

TOKYO (AP) -- Japan's benchmark stock index plunged more than 4 percent in Tuesday morning trading in the second day of a frenetic sell-off over fears of a possible global slowdown.

The benchmark Nikkei index lost 587.63 points, or 4.41 percent, to 12,738.31 points on the Tokyo Stock Exchange at the end of the morning session.

The index, which lost 3.9 percent Monday, has now erased nearly 17 percent from its close on the last day of trading in 2007, and is hovering at its lowest in more than two years.

Investors are worried the slide in global stocks -- set off by the billions of dollars in losses banks have suffered from the problems in the U.S. housing market -- won't stop.

Japanese companies' earnings are also hurt by a sliding dollar, which erodes the value of their overseas earnings. The dollar was trading at 106.35 yen late morning, down from 106.76 yen late Monday in Tokyo.

Japanese Economy Minister Hiroko Ota said the plunge in shares that had originated in the U.S. was spreading to other nations in a domino-like effect.

"We must take the approach of working together with other nations on this," she said on nationally televised news.

Stocks fell sharply in Asia and Europe on Monday following Wall Street's declines last week amid investor pessimism over the U.S. government's stimulus plan to prevent a recession.

In Europe, Britain's benchmark FTSE-100 slumped 5.5 percent, France's CAC-40 Index tumbled 6.8 percent and Germany's blue chip DAX 30 plunged 7.2 percent.

In Asia, other markets have continued to fall Tuesday, with Hong Kong's Hang Seng Index down around more than 6 percent near midday and major benchmarks in several other markets down more than 5 percent.

Japan's broader Topix index, which includes all shares on the Tokyo exchange's first section, lost 51.52 points, or 3.98 percent, to 1,275.29 at the end of the morning session.

U.S. markets were closed Monday for the holiday commemorating civil rights leader Martin Luther King.

SUSONO, Shizuoka (AP) -- Toyota's new driving simulator for testing safety features is a giant dome that swivels, tips and swishes on a rail to deliver the sensations of maneuvering on real-life roads.

A Lexus inside the 4.5 meter (15 foot) high, 7 meter (23 foot) diameter dome provides the sense of acceleration, vibration and sound of driving a regular car.

The internal surrounding sides of the dome show 360 degree computer graphic imagery of roads and landscape, complete with signs, pedestrians, street-side stores and faraway Mount Fuji -- all synchronized to move with the simulated driving.

In a demonstration for reporters Monday at a Toyota technology center, the dome moved in a 35-meter (115 foot) long building, skidding on a rail horizontally and vertically.

When a driver pushed on the brakes, the dome tilted forward to give the effect of stopping. When the driver turned the steering wheel to the right, the dome cocked to the right to give the feeling of turning.

Toyota Motor Corp. officials said the simulator is useful for testing safety features such as warning beeps about oncoming vehicles without endangering drivers. The machine will also be handy for analyzing how drowsiness and intoxication affect driving, they said.

The big unknown about making safe cars is understanding the human brain and other aspects of human behavior, and the simulator will help solve such questions, said Executive Vice President Kazuo Okamoto.

Other automakers have developed driving simulators, but they tend to be stationery, giving the effect of driving by shaking and rocking, and showing imagery only in one spot. The dome and other moving parts of Toyota's simulator weighs 78 tons, the company said.

The two reporters who drew lots for trying out the simulator said the braking and acceleration felt much like real-life driving, although one reporter said the graphics weren't realistic enough.

There are no computer graphics of a crash. Hitting a computer generated pedestrian merely makes the image disappear.

Toyota engineer Takashi Yonekawa said the simulator's purpose is not to test driving skills. It will be used to develop safety features tailor-made for various kinds of drivers, including the elderly and beginners, he said.

Koji Endo, auto analyst with Credit Suisse in Tokyo, who also took part in the demonstration, said he thought the simulator was a long-term investment.

Toyota declined to say how much the simulator cost to make. There are no plans to sell the simulator, it said.

On a test course, Toyota separately showed experimental wireless safety features, such as those that warn vehicles of a red light ahead through beeping and the image of a traffic light that pops up near the speedometer. The system uses infrared beacons on roadside poles.

A similar technology, which uses a wireless network, warns a driver of an unseen pedestrian with a GPS device.

Such warnings systems are being developed by other automakers, including Nissan Motor Co. and Honda Motor Co. Toyota said the three automakers plan to begin collaborating on the technology on road tests next year.