* Exports down 0.7 pct month/month, 36 pct yr/yr in August
* Improvement in shipments to US, but Asia recovery fragile
By Rie Ishiguro
TOKYO, Sept 24 (Reuters) - Japan's exports fell in August for the second straight month, underscoring the view that improvements in global demand are patchy at best and will keep the country's economic recovery shaky.
The Bank of Japan last week upgraded its view on the economy, saying improving exports and output heightened the chances that its forecast for a moderate pick-up early next year would be met, but the data cast doubt on this scenario. "Japan isn't participating much in the narrowing declines in exports from the region. What's hurting Japan more is that in terms of products it is losing competitiveness to newcomers," said Simon Wong, regional economist at Standard Chartered in Hong Kong.
"The government is trying to restructure fiscal programmes to see if they can give the economy a lift. ... (It) is trying to steer fiscal spending toward the household sector, and this is the right thing."
Exports fell 0.7 percent in August from July on a seasonally adjusted basis, trade data showed on Thursday.
For a graphic of Japan's exports by destination click http://r.reuters.com/peh38d
Compared with a year before, Japan's exports fell 36 percent in August, matching a median market forecast and largely unchanged from the previous month's annual slide of 36.5 percent.
But some analysts took a slowdown in export falls to the United States as a bright sign for the world's No. 2 economy.
Exports to the United States fell 34.4 percent in August from a year earlier, less than the 39.5 percent drop in July.
"Up until now the recovery has centred on exports to Asia, but those to the United States seem to be improving," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
"I think the export recovery is likely to gather pace around the year-end when the U.S. and European economies start to recover. As Japanese industrial production moves in line with exports, that will augur well for the outlook for production."
Overall, exports have been falling less in year-on-year terms after tumbling nearly 50 percent in February. Output has bounced back from a steep fall triggered by the global crisis, helping Japan emerge from its worst recession in modern history.
Analysts say that the moderate recovery is likely to continue as the U.S. economy gradually recovers from the global financial crisis, but that global trade may slow again as falling salaries and a lack of job security weigh on consumer spending.
"Exports fell in August from July but we don't see it as the beginning of a downtrend," said Kyohei Morita, chief Japan economist at Barclays Capital.
"U.S. and Asian economic growth will pick up, supporting Japanese exports in the coming months. The yen's rise is a bit of a worry but as long as it doesn't climb above 80 to the dollar, the overall uptrend in exports won't change."
The U.S. economy is expected to grow 3.0 percent on an annualised basis in the third quarter of this year, a Reuters poll showed, a more robust recovery than originally expected from the worst recession in over half a century.
Fuelling optimism, U.S. Treasury Secretary Timothy Geithner said on Tuesday that the economy appeared to be at the "very beginnings" of a recovery.
The recovery in Japanese shipments to Asia, however, remains fragile.
Exports to China fell 27.6 percent from a year earlier, more than the previous month's 26.5 percent decline, reflecting weak demand for steel products and electronic parts.
That pushed exports to Asia down 30.6 percent in August from a year earlier, against the previous month's 29.9 percent fall. (Editing by Hugh Lawson)