Japanese exports rose more than expected in June from a year earlier but the pace of increase slowed for the fourth straight month, a sign the economic recovery may lose steam on moderating overseas demand.

While analysts expected export growth to slow from a sharp rebound in the first quarter, the yen's recent gains and signs of a slowdown in big markets such as the United States and China have heightened uncertainty on the outlook for Japan's export-reliant economy.

Exports to China may have peaked for now. Shipments to Europe and the United States can't be relied on either. That means the key will be whether exports to other Asian nations sustain momentum, said Takeshi Minami, chief economist at Norinchukin Research Institute.

The impact of recent yen rises will appear with a time lag, so we'll see it affecting exports in the coming months. I think the impact will be pretty significant.

Exports rose 27.7 percent in June from a year earlier, more than a median market forecast for a 23.5 percent increase, trade data from the Ministry of Finance showed on Monday.

But export growth slowed for the fourth straight month after peaking in February, when it rose 45.3 percent, boding ill for an economy heavily reliant on overseas demand. From May, exports were down 1.8 percent, the second consecutive drop on a month-on-month basis.

Shipments to Asia, which account for more than half of Japan's total exports, rose 31.7 percent in June from a year earlier but that still represented a slowing for the fifth straight month.

Exports to China rose 22.0 percent from a year earlier, also marking the fifth straight month of slowdown.

The slowdown was particularly noticeable in shipments to the European Union, with growth shrinking to 9.0 percent from 17.4 percent in May, as the yen's rise against the euro and the region's debt crisis hurt automobile demand, a MOF official said.

But exports to the United States picked up on brisk auto shipments, as the yen's rise against the dollar had been relatively gradual.

A strong yen has already started to push down export prices, but exporters have managed to offset it with surges in volume, said Junko Nishioka, chief economist at RBS Securities in Japan.

The real exports index compiled by the Bank of Japan, used to assess changes in export volume, edged down 0.4 percent to mark its first drop in 16 months, but the degree of fall was modest compared to strong rises in preceding months, indicating export volumes have held relatively steady.

But the impact of the strong yen will likely become more visible from July-September as exports to Asia will likely show no further growth and will not help expand export volumes, while the U.S. economy's dim outlook keeps the yen on an uptrend, Nishioka said.

Japan's economy expanded 5 percent in the first quarter of this year after emerging from recession last year, driven by solid exports to fast-growing emerging Asian nations.

Some analysts warn that the yen's appreciation may hurt exports by reducing the competitiveness of Japanese goods sold overseas, prompting the Bank of Japan to loosen monetary policy further.

While yen moves alone are unlikely to trigger an immediate policy response by the BOJ, sharp yen gains accompanied by stock market falls deep enough to threaten the economy's recovery could lead to further monetary easing.

One of the worries for Japan's economy at the moment is the yen's appreciation. If the yen firms rapidly it could raise concerns about Japanese companies' profits, thus stocks would be expected to fall, said Tatsushi Shikano, a senior economist at Mitsubishi UFJ Morgan Stanley Securities.

If the yen firms and stocks fall sharply, the Bank of Japan may have to take some measures.

(Editing by Michael Watson)