Japanese industrial output fell for the first time in seven months compared with a month earlier in February but analysts said demand for cars and products like digital cameras at home and abroad boded well for coming months. Industrial production fell 1.7 percent from January, more than the 0.1 percent median decline analysts had expected, government data showed on Thursday. "It's a pretty steep fall, but you have to keep in mind that the Lunar New Year has had some irregular effects on seasonal adjustments around January to March," said Yoshimasa Maruyama, an economist at BNP Paribas. "Also, the outlook for April is pretty firm so I don't think that one needs to conclude that the trend is weakening." Manufacturers' output, the core component of production, was expected to rise 0.3 percent in March and 3.1 percent in April, data from the Ministry of Economy, Trade and Industry showed. Sectors in which output fell in February included chemicals and semiconductor parts. Those in which production rose included mobile phones, digital cameras and automobiles. The ministry reiterated its assessment that industrial output was in a moderately rising trend. "The overall trend is not bad. In fact, most companies see a relatively favourable trend continuing," a ministry official said. Markets showed little reaction to the data, although the Nikkei share average topped 17,000 in early trading -- the first time above that level since September 2000. The Nikkei was up 0.98 percent at 17,103.96 at midday on Thursday. The yen briefly slipped against the dollar and the euro after the data, but was little changed around 117.70 yen per dollar by midday. Japan's economy is recovering steadily due to solid domestic demand and exports, boosting business for manufacturers. The economy expanded 5.4 percent on an annualised basis in the October-December quarter, with domestic spending and net exports contributing about the same to growth. Trade data last week showed exports to China, Japan's biggest trading partner, rose 40.8 percent in February from a year earlier while exports to the United States rose 16.1 percent. On the domestic front, capital spending has been robust on the back of strong corporate profits, and personal consumption has been picking up on brightening wage and job conditions. Data on Wednesday showed retail sales rose 1.0 percent in February from a year earlier. Markets are now focusing on consumer price data due on Friday and the Bank of Japan's tankan survey of corporate sentiment on April 3. Strong readings could renew speculation of an early interest rate increase by the BOJ, which ended its five-year-old hyper-easy monetary policy on March 9.