By Stanley White

TOKYO (Reuters) - Sentiment at large Japanese manufacturers worsened for the second consecutive quarter over April-June due to a rising yen, although companies did revise up their capital expenditure plans.

Large manufacturers said they expect sentiment to rebound in July-September, offering encouragement to policymakers navigating weak exports and lingering concerns about the global economy.

The survey results could offer some relief to the Bank of Japan, which holds a monetary policy meeting later this weak. The upgrade of capital expenditure plans should bolster the central bank's argument that its negative interest rate policy would spur lending.

"Right now the economy is in a holding pattern, but I don't expect things to worsen from here on," said Shuji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.

"The benefits of negative rates have been elusive so far, but we could finally be seeing the capital expenditure boost."

The business survey index (BSI) of sentiment at large manufacturers was minus 11.1 in April-June, compared with minus 7.9 in January-March. The BSI is compiled by the Ministry of Finance and the Economic and Social Research Institute, an arm of the Cabinet Office.

The index measuring big manufacturers' sentiment three months ahead was at plus 7.0 versus plus 7.1 previously.

Companies forecast their capital expenditure to rise 3.8 percent in the business year that started in April, versus a 6.6 percent decline forecast in the previous survey.

Japan's economy grew faster than initially estimated in the first quarter as capital spending fell less than was first reported, but worries remain over slow consumer spending and weak exports.

The yen has gained more than 12 percent versus the dollar since the start of the year on uncertainty over the pace of pending U.S. Federal Reserve interest rate increases.

A rising yen tends to worry Japanese companies because it reduces overseas earnings, but the sentiment survey found manufacturers believe the negative impact will be temporary.

The BSI measures the percentage of firms that expect the business environment to improve from the previous quarter minus the percentage that expect it to worsen.

(Reporting by Stanley White; Editing by Eric Meijer)