TOKYO (AFP) - Japan's central bank is ready to act quickly to stabilise financial markets if fresh problems emerge, governor Masaaki Shirakawa said Thursday.

"The bank will be prepared to act swiftly and decisively if concerns arise that financial market stability might be compromised," he told a meeting of Keidanren, the nation's biggest business lobby.

The global financial crisis pushed Japan into its worst economic downturn in decades but recent economic indicators have shown a budding recovery in exports and production.

Shirakawa said the Japanese recovery was likely to stay moderate through the first half of the next fiscal year starting in April.

The government's stimulus packages will soon expire and could hit hard local and rural economies that rely heavily on public projects, he said.

The Japanese recovery, however, would likely to continue, he added.

"This is because advanced economies, including Japan, have made clear that they intend to continue with economic stimulus measures until economic recovery is assured," he said.

"Also, the strength of domestic private demand in emerging economies is likely to remain self-sustaining," he said.