Japanese stocks edged lower after a report showed the nation’s industrial production unexpectedly declined in February, and as the strengthening yen damped the outlook for exporters’ earnings.

Fanuc Corp. (6954), an industrial robot maker, slumped 2.5 percent. Toyota Motor Corp., Asia’s biggest carmaker by market value, retreated 1 percent. Inpex Corp., Japan’s No. 1 energy explorer by market value, dropped 1.4 percent after oil prices declined yesterday. Daiichi Sankyo Co. fell 2.1 percent after Citigroup Inc. cut the drugmaker’s rating on the impact of expiring patents.

“It’s not a bearish case, but you just don’t have sustainability for the markets to reweight higher like they did three or four months ago,” saidAndrew Pease, Sydney-based chief strategist for the Asia-Pacific region at Russell Investment Group, which oversees about $150 billion.

The Nikkei 225 Stock Average (NKY) slid 0.6 percent to 10,058.37 as of 9:59 a.m. in Tokyo, paring its monthly advance to 3.5 percent. The gauge is headed for its fourth monthly gain, the longest such streak since February 2011, as the yen weakened and U.S. showed signs of economic recovery. The broader Topix Index slid 0.5 percent to 853.24, headed for a 0.1 percent weekly gain. Volume on the gauge was 25 percent below its 30-day average.

Factory Output Drops

Factory output slid 1.2 percent in February from the previous month, the Trade Ministry said in Tokyo today, after a 1.9 percent gain in January. The median estimate of economists surveyed by Bloomberg News was for a 1.3 percent increase. Separately, consumer prices unexpectedly rose 0.1 percent in February, while the jobless rate fell to 4.5 percent from 4.6 percent in January.

Exporters declined after the yen touched 81.83 against the dollar today, strengthening from as low as 83.18 yesterday. A stronger yen reduces overseas income at Japanese companies when converted into their home currency.

Crude oil for May delivery slumped 2.5 percent yesterday in New York, while the London Metal Exchange Index of prices for six industrial commodities including copper and aluminum fell 0.4 percent.

Shares on the Topix are valued at 1.05 times book value, up from 0.88 in December, according to data compiled by Bloomberg. A number less than one means companies can be bought for less than value of their assets.

The Nikkei 225 Volatility Index (VNKY) rose 0.6 percent to 19.82, indicating traders expect a swing of about 5.7 percent on the benchmark gauge over the next 30 days.

To contact the reporters on this story: Kana Nishizawa in Hong Kong atknishizawa5@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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