BUSINESS sentiment suggests Japan's economy is falling into the second phase of a ''double dip'' downturn due to the effects of a cold, wet summer and the strong yen, Japan's Economic Planning Agency (EPA) says in its latest report. Last month's report said the economy's downward momentum had abated and the economy was ''treading water''. Yesterday's report said that due to the cold weather and the yen's surge, the economy could be on its way down again. ''It is not as though the economy is getting worse and worse,'' an EPA official said. ''Rather, it is that the economy has improved a little and now is declining again.'' The report comes a month after the Government announced a 6.2 trillion yen (about HK$446.52 billion) economic package aimed at jump-starting Japan's recession-plagued economy. During the first three months of 1993, Japan's gross domestic product (GDP) in real terms rose 0.6 per cent. But during the second quarter, real GDP fell 0.4 per cent, the report said. And the jobs-to-applicants ratio - a measure of demand versus supply in the job market - is falling steadily. In August, there were 100 applicants for every 70 job openings. Japan's wholesale prices in September remained unchanged from the previous month following a decline of 0.6 per cent in August, the Bank of Japan said yesterday. The bank said domestic wholesale prices had edged down 0.2 per cent from the previous month after decreasing 0.2 per cent in August. Export prices gained two per cent, following a two per cent decline in August. The average exchange rate for the US dollar throughout September was 105.27 yen, compared with 103.68 yen in August. Meanwhile, Japan is close to agreeing on rice-market liberalisation to promote stalled global trade talks, several major newspapers said yesterday, despite denials from Prime Minister Morihiro Hosokawa. The Nihon Keizai, Mainichi and Asahi dailies said Japan and the US were approaching an agreement in Geneva to replace the ban on rice imports with tariffs after a six-year transition period. During the period Japan would import between three and eight per cent of its domestic demand, a formula known as ''minimum access'' in global talks on freer trade being held under the General Agreement on Tariffs and Trade (GATT). The Japanese Government immediately rushed to deny the news, which also coincided with a Yomiuri Shimbun report that the Japan New Party, one of the seven parties in the ruling coalition and led by Mr Hosokawa, was preparing a new rice policy on the assumption Japan would import rice. Mr Hosokawa said: ''It is absolutely untrue. Our stance has not changed.'' Agriculture, Forestry and Fisheries Minister Eijiro Hata said he would ''go overseas myself and strongly assert'' Japan's policy of maintaining self-sufficiency in rice. The Kyodo News Service said Mr Hata would also seek an understanding on Japan's rice policy from GATT director-general Peter Sutherland, who is scheduled to visit Japan later this month. Foreign Minister Tsutomu Hata refused to comment on the issue at a press conference, but said Japan must help realise the successful conclusion of the Uruguay Round of trade talks.