Japan's economic recovery continues to stutter

The jobless rate rose to 4.7% in February, from 4.5% the previous month, where no change had been forecast.

Data also published on Tuesday showed a fall in household spending and a sharp decline in retail sales in February.

Japan emerged from a mild recession at the end of 2004 but the government insists its recovery is on track.

Shares fall

"We do not have big concerns," Hiroyuki Hosoda, Japan's chief cabinet secretary, said of the latest economic data.

However, stock markets reacted negatively to the figures, Japan's benchmark index falling to its lowest level in four months.

The Nikkei average fell 1.6% to 11,599.82.

Employment rates had improved in 2004 as an export-led economic recovery encouraged manufacturers to take on more staff.

The economic slowdown seems to be over but solid evidence is still lacking Toshio Sumitani, Tokyo Research Centre

Analysts said the February decline was a surprise but said it may reflect the fact that people were looking for better paid jobs.

Household spending fell 3.8% year-on-year in February while retail sales dropped 2.8%, their sharpest annual decline since November 2003.

Shop sales were affected by the 2004 leap year which meant there were fewer Sundays last month than in February 2004.

'Unexpectedly weak'

The Japanese economy went into reverse in the middle of last year, its gross domestic product (GDP) contracting in two successive quarters.

It managed a modest recovery in the final quarter, showing 0.1% growth.

"The February data have been unexpectedly weak," Toshio Sumitani, an economist with the Tokyo Research Centre, told Agence France Presse.

"The economic slowdown seems to be over, which has been reflected in a stock market that has been advancing since early this year but solid evidence (for this) is still lacking."