The Japanese government downgraded its assessment of the economy in its monthly report yesterday as the impact of the March 11 quake, tsunami and the Fukushima nuclear crisis take a grim toll on activity and confidence.

It was the first downward revision in 6 months and is in line with the Bank of Japan, which also cut its assessment of the economy last week in the wake of the March 11 disaster, saying it would remain under "strong downward pressure" for some time.

"The economy is showing weakness recently due to the influence of the Great East Japan Earthquake," the government said in its monthly economic report for April.

The March report said the economy was turning to a moderate recovery path, although growth remained weak and there was concern about the influence of the quake .

The government also downgraded its views on key aspects of the economy including exports, industrial production and private consumption, after the disasters (and the Fukushima crisis) disrupted supply chains and triggered power shortages.

"The condition of the economy is no longer flat or at a standstill, but rather the direction is downward," said Shigeru Sugihara, director of macroeconomic analysts at the Cabinet Office.

The government expects the weakness to continue for the near term but with a pickup resuming along with a recovery in production, reflecting solid overseas economies and the effects of various policy

After ignoring Japan for 10 days, world markets got a reminder yesterday that the world's third biggest economy continues to be hurt by the impact of the tsunami, earthquakes and the Fukushima nuclear crisis which won't go away.

Markets around the world fell around 1% or more, the biggest fall for a month as investors took profits from shares.

Commodities also tumbled on profit taking and fears the big run up was too much.

Three big aftershocks in less 24 hours, a fire and more problems at Fukushima and a move by the Japanese Government to raise the crisis to a rating of 7, the highest there is on the international scale (and equal to Chernobyl in 1986), combined to rattle market confidence.

Then there's the continuing uncertainty in Libya and worries about the high oil prices and whether the current strong market boom was getting overbought.

Coming after the International Monetary Fund reminded us that some economies are not strong, by cutting growth estimates for the US, Japan and UK, plus some smaller economies, such as Australia, markets fell.

The IMF was upbeat about the global economic outlook (although it cautioned about the possible impact of rising oil pries).

But investors ignored that as news from Japan reminded them that the world's third most important economy was weakening and would become weaker before a hoped for recovery later this year.

US markets took a hit in late trading on Monday after the first quake, a 6.6 magnitude rattler late yesterday near Fukushima (almost a month to the hour after the March disaster hit) and the S&P