Japanese industrial output in unexpected fall

Japanese industrial production slipped 0.1% in June, from the previous month, amid fears that economic weakness in Europe is threatening recovery.

Industrial production in Japan unexpectedly fell for the third straight month, prompting renewed fears the economy is losing steam.

Factory output dipped 0.1% in June, compared to the previous month. It follows a 3.4% decline in May.

The data indicates weak overseas demand for Japanese products.

"Industrial production appears to be flat," the Ministry of Economy, Trade and Industry reported, downgrading a May forecast of production recovering.

The fall was mainly due to decreased output in the machinery, iron and steel sectors, data showed.

It comes after the central bank and government authorities said the economy was recovering from last year's earthquake and tsunami that caused major damage to factory production.

Eurozone threat

However, they did add that the European debt crisis remains a major threat to the recovery.

Japan's biggest steelmaker Nippon Steel Steel output was one the main drivers of the lower factory output figures

"Economic growth is on a much weaker trend than what the government and the Bank of Japan are telling us to believe," said Satoshi Osanai from Daiwa Institute of Research.

"Any recovery will be temporary and the economy will continue to languish for months ahead. Exports to the US are already at high levels and have little room for additional growth," he added.

The strong yen is another hurdle for Japanese exporters has it makes their goods more expensive overseas.

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