TOKYO (AFP) - Japan's core machinery orders were unexpectedly strong in May but experts warned the official figures released on Wednesday had failed to dispel gloom about prospects for Asia's largest economy.

The cabinet office said core machinery orders rose 10.4 percent in May compared with April, when they had jumped 5.5 percent, but economists remain worried that the Japanese economy is set to slow as world growth cools.

One-off factors largely explained some of May's rise in machinery orders, said Daiwa Institute of Research economist Keiji Kanda, whereas high oil prices and slowing exports were continuing to squeeze the economy.

"It would not allow us to say the economy is accelerating," Kanda said. "Exports are slowing, which is likely to lead to lower capital spending and lower machinery orders."

He said there were also lingering fears of a recession in the US, the world's biggest economy and a key buyer of Asian goods and services.

Experts had forecast a May rise in core machinery orders of just 0.8 percent, but the actual figure was the fastest growth since a 17.3-percent gain in January this year.

The figures are regarded as a leading indicator of corporate capital spending, which helped Japan emerge from a decade of deflationary torpor in the 1990s.

But the longer-term trend in machinery orders was less healthy, and Wednesday's figures should not be viewed as strong data, said Toshio Sumitani, an economist at Tokai Tokyo Research Centre.

"The broader trend in machinery orders has been sliding since it peaked out in the spring of 2006," he said. "As prices keep rising, consumer sentiment has been worsening. I believe the economy is deteriorating in June-July," he said.

The official figures showed May's manufacturing sector machinery orders jumped 12.2 percent from April, while orders by non-manufacturers rose 8.8 percent.

But the government forecasts that core machinery orders will fall 10.3 percent in the three months to June from the previous quarter, after edging up 2.2 percent between January and March.

"With rising prices and low consumer spending, in addition to sluggish Japanese stocks, the outlook for Japan's economy remains far from optimistic," said Yosuke Hosokawa, the chief forex strategist at Chuo Mitsui Trust Bank.

The stock market rose by 1.82 percent by the lunch break Wednesday, helped by lower oil prices and hopes for more US action to ease the credit squeeze, rather than just May's data, dealers said.

Japan's economy is on the mend after its struggle to overcome deflation and recession, but sluggish consumer spending has raised concerns that the country's export-led recovery is vulnerable to the global economic slowdown.

Japan's central bank is also expected to refrain from raising its super-low interest rates any time soon given signs of slowing economic growth.

Top Japanese executives were at their most pessimistic in almost five years as soaring costs, a slowing global economy and a stronger yen piled pressure on profits, the central bank said earlier this month.

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