* Feb nationwide core CPI up 0.7 pct yr/yr vs f'cast +0.8 pct
* Core-core CPI rises 0.4 pct yr/yr in February
* Soft inflation to keep BOJ under pressure to keep stimulus (Adds JGB market moves, details on deflation mindset)
By Leika Kihara
TOKYO, March 22 (Reuters) - Japan's annual core consumer inflation slowed in February as gasoline costs fell for the first time in more than two years, keeping the central bank under pressure to maintain, or even ramp up, stimulus to accelerate price growth to its 2 percent target.
The data adds to growing signs that Sino-U.S. trade tensions and slowing global demand are hurting Japan's economic expansion and business sentiment.
If the weakness persists, the Bank of Japan (BOJ) may be forced to cut its inflation forecasts again at next month's rate review, analysts say, though policymakers are wary of expanding an already massive stimulus programme any time soon.
The nationwide core consumer price index (CPI), which includes oil products but excludes volatile fresh food costs, rose 0.7 percent in February from a year earlier, government data showed on Friday, falling short of a median market forecast for a 0.8 percent gain.
The slowdown from January's 0.8 percent increase was due largely to a 1.3 percent drop in gasoline prices, which was the first year-on-year decline since November 2016, the data showed.
"As overseas economies begin to weaken, it's hard to project inflation hitting the BOJ's 2 percent target," said Takeshi Minami, chief economist at Norinchukin Research Institute.
"The BOJ is likely to maintain its current policy at next month's rate review," though it could ponder additional easing at some point given the recent weak data, he said.
An index the BOJ focuses on - the so-called core-core CPI that strips away the effect of both volatile food and energy costs - rose 0.4 percent in February, unchanged from the previous month's gain.
The costs of labour and shipping are pushing up prices of food items such as soft drinks, yoghurt, ramen noodles and ice cream. However, frugal consumers are resisting price hikes, capping retail prices and underscoring an entrenched deflationary mindset that Japan has been trying to overcome for decades.
Companies like Coca-Cola Bottlers Japan Holdings Inc , Suntory Beverage & Food and potato chips maker Calbee Inc, have warned of falls in profits as the planned price hikes fail to cover rising upstream costs.
BOJ IN A BIND
The BOJ faces a dilemma. Years of heavy money printing have dried up market liquidity and hurt commercial banks' profits, stoking concerns over the rising risks of prolonged easing.