The business confidence of major manufacturers dropped for the first time in three quarters in the Bank of Japan's latest tankan survey released Dec. 14, reflecting pessimism as U.S. subprime mortgage woes continue to cast a dark cloud over the economy.

The BOJ's quarterly survey showed that the business sentiment of big manufacturers dropped to 19 from 23 in the previous tankan, released in October. The average forecast of 24 private-sector economists surveyed was 20.

The tankan index represents the difference of companies reporting favorable business conditions minus those reporting unfavorable ones.