Gross domestic product expanded 0.6 per cent from the first quarter, the Cabinet Office said in Tokyo, twice the revised 0.3 per cent growth of the first quarter.

Analysts forecast a median gain of 0.2 per cent in the three months ended June 30, Bloomberg reported.

The figures suggest an economic recovery in the world’s second largest economy may be gaining momentum. Gains in the stock market and rising business confidence has forced the government and the central bank to raise their forecasts.

Rally

Today's report is "forming the base for a continued rally in Japan,'' Alex Muromcew of  Loomis Sayles & Co, a global fund manager in San Francisco, told Bloomberg.

The Bank of Japan's quarterly Tankan survey, the most widely watched measure of business confidence, last month showed large manufacturers in the second quarter were their least pessimistic in more than two years.

The Cabinet Office said capital spending rose 1.3 per cent as companies anticipated more orders from the US, Japan's biggest export market. Consumer spending advanced 0.3, against poll expectations of a 0.1 percent fall.

The US economy in the second quarter grew by an unexpected annualized 2.4 per cent, boosted by tax cuts and the end of major hostilities in Iraq. 

The buoyant economic outlook is also good news for Prime Minister Junichiro Koizumi, who faces an election for leadership of the ruling coalition -- and with it the post of prime minister -- in September.

His management of the economy is in the spotlight, as Japan tries to recover after two recession in 12 years.