Asia's top companies are less upbeat on their business outlook than in the first quarter, with mounting concern over the eurozone crisis and a slowdown in China's growth, according to the latest Thomson Reuters/INSEAD Asia Business Sentiment Survey, published on Wednesday.

The Thomson Reuters/INSEAD Asia Business Sentiment Index slid to 69 in June from 74 in March, when it saw a dramatic 14-point jump from the December survey. A reading above 50 indicates an overall positive outlook.

"It's obvious there are a few macro headwinds," said James Koh, analyst at Maybank Kim Eng in Singapore.

"Companies are understandably a little worried. On one hand, you have the Greek fall-out and, on the other hand, we have already seen a mild deceleration of growth in China."

Of the record 177 Asian companies polled, 78 said their business outlook for the next six months was positive, while 87 said it was neutral, and 12 were negative.

The poll was conducted by Thomson Reuters in association with INSEAD, a global management and business school in Singapore and France, between June 4-15.

Asked what was the biggest risk factor they face, 111 companies said global economic uncertainty, and 28 cited rising costs.

"Things are looking tougher with what's happening in the global economy. Asia is not fully insulated but will still do relatively better given that most governments in the region still have leeway to stimulate domestic economies," said Kristy Fong, investment manager at Aberdeen Asset Management Asia.

"Cost pressures are another issue, such as rising inflationary pressures in Singapore (and) infrastructure and logistical bottlenecks in India."

Carey Wong, analyst at OCBC Investment Research, said end-consumers were turning more cautious in placing orders.

"As long as customers don't give them very clear order indications, sentiment won't be that good. As a business owner, you can't plan ahead, such as planning capital expenditure."

GLOBAL EXPOSURE

Europe's ongoing debt crisis and worries over a slowing China battered stock markets globally in the second quarter, knocking the MSCI world equity index down by more than 13 per cent.

Sentiment in industry sectors heavily dependent on the global economy, such as shipping and financials, deteriorated the most, the quarterly survey showed.

"Asian businesses - the big exporters - face potential weakness in essentially most of their end-markets," said Nick Paulson-Ellis, the India head at Espirito Santo Securities.

"It's clearly not going to be an easy time. You've got slowdowns domestically after pretty aggressive tightening last year in a lot of developing economies and you've got weakness in end-markets, so it's a very, very tough period for Asian corporates."

Shippers - those surveyed included Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering - saw the biggest drop in sentiment from the March survey, but consumer-related sectors such as retail, drugs and food were more positive than in March.

"Companies in consumer staples such as instant coffee and supermarkets seem to be slightly more bullish, especially those more concentrated in ASEAN," said Maybank Kim Eng's Koh.

"They're less affected by any slowdown in industrial production and higher-end spending, and their exposure is more local rather than macro."

DOWN UNDER

By country, Australia had the lowest reading of 42 - the only score below 50 - while all Philippine companies polled were positive.

Sentiment among Chinese firms fell to the lowest level since the survey began in 2009, ahead of only Australia and Taiwan, as the world's second-biggest economy showed signs of slowing.

But Elvic Ng, Hong Kong-based head of research at UOB Kay Hian, sees a pick-up in China's economic growth and business sentiment in the next 6-12 months, as a June 7 interest rate cut and monetary easing are signs the government has shifted to pro-growth monetary and fiscal policies.