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Japan sees economy grow at 3.5 pct pace in 1Q

TOKYO (AP) -- Japan's economy saw a stronger than expected recovery last quarter, growing at a 3.5 percent annual pace as the government stepped up public works spending and eased credit to encourage investment.

The data for January to March showed the world's third-largest economy grew 0.9 percent on a quarterly basis, compared with revised data showing 0.3 percent in the final quarter of 2012. The figures were reported by the Cabinet Office on Thursday.

Prime Minister Shinzo Abe took office in late December vowing to help the economy recover from two decades of malaise by breaking out of chronic deflation. His policies have helped push share prices to their highest levels in over five years, fueled by strong liquidity and expectations of improved profitability for listed companies.