By Shigeo Kodama
TOKYO, March 19 (Reuters) - Japanese manufacturers' business sentiment hit a record low, a Reuters poll showed on Thursday, as widening pain from the global downturn reinforced worries of a deep and prolonged recession in the world's No. 2 economy.
Service-sector sentiment also hovered near a record low as consumers kept their purse strings tightened, boding ill for the Bank of Japan's closely watched quarterly tankan survey due on April 1.
The March results for the Reuters Tankan, a monthly poll of 228 firms that tracks the BOJ tankan, added to mounting evidence of a deepening recession as demand crumbles and companies cut jobs.
Manufacturers polled forecast only a slight improvement in business conditions in the next three months, from a record low forecast in February.
Non-manufacturers also see confidence three months ahead to remain near a record low marked in January.
"We aren't seeing any signs of recovery in our major markets, including the auto sector," an electric machinery company said in the survey, conducted from Feb. 26 to March 13.
In the previous BOJ tankan in December, business sentiment suffered its sharpest fall since the 1970s oil crisis. The central bank cut interest rates to 0.1 percent shortly after.
The Reuters Tankan's index measuring manufacturers' sentiment fell 4 points to minus 78, worse than the previous record low of minus 76 marked in January. Compared with three months ago, the index was down 14 points.
Sentiment worsened for makers of electric machinery and automobiles, who complained of weak overseas demand and a strong yen. Other sectors said sharp output cuts by automakers were affecting their businesses significantly.
Confidence among non-manufacturers stood at minus 37, near a record low of minus 39 marked in February and down 11 points from December, as companies felt the pinch from weak personal consumption.
The index readings are derived by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A negative index figure means most of those surveyed are pessimistic about conditions.
In the last quarter, the Japanese economy sank at its fastest rate since the 1974 oil crisis, shrinking about twice as much as the United States and the euro zone, due to its heavy reliance on exports.
Gross domestic product contracted 3.2 percent in the fourth quarter and economists say a rising pile of unsold goods could signal a similar contraction in January-March. (Writing by Leika Kihara, editing by Chris Gallagher)