Figures deal yet another blow to Japanese prime minister's attempt to tackle deflation

Japanese factory output fell by a worse-than-expected 3.4 percent in February, adding to the gloom enveloping the world's third-largest economy as it struggles to overcome last year's sales tax rise.

The latest month-on-month figures missed economists' median forecast of a drop of less than two percent and reversed a 3.7 percent rise in January.