Tokyo investors will be watching the crises in Ukraine and Iraq while focusing on key economic indicators in Japan and the United States next week. "Japanese stocks extended their winning streak this week partially because geopolitical concerns were subdued," said Hikaru Sato, senior technical analyst at the investment strategy section of Daiwa Securities.
"If geopolitical concerns continue to decrease, it will be a positive factor," Sato said, "but if the concerns revive, it may bring a negative impact."
Russian President Vladimir Putin and his Ukrainian counterpart Petro Poroshenko will meet with top EU officials in Belarus next week.
Poroshenko's office said the leaders would use the August 26 meeting to discuss ways to stabilise the situation in eastern Ukraine, energy security and Kiev's new trade deal with the European Union, which Russia has opposed.
In Iraq, the OPEC oil cartel's second largest producer, Islamist militants who have overrun large swathes of the country's north and west are now being pinned back by US military strikes that began on August 8.
"Players will also focus on economic indicators" such as US housing-related figures to be released next week. That comes after shares jumped on Tuesday when statistics showed US housing starts leaped 15.7 percent in July, Sato said.
Japan will also release a package of monthly economic indicators at the end of next week, including jobless figures and inflation for July.
On Friday, Tokyo stocks fell 0.30 percent as caution prevailed ahead of a key speech by US Federal Reserve chief Janet Yellen.
The Nikkei 225 index lost 47.01 points to 15,539.19 after nine consecutive days of gains. The benchmark index rose 1.44 percent this week.
The Topix index of all first-section issues was down 0.40 percent, or 5.12 points, at 1,286.07. It gained 1.21 percent over the past week.
The Tokyo market opened higher on Friday after the S&P index logged another record close on Wall Street.
"There is still some buying in undervalued and so-called laggard sectors such as banks and brokerages," said an equity trading director at a European brokerage.
"But overall a lack of trading incentives, combined with reticence before Yellen's speech is enough to keep people out of the market," the trader told Dow Jones Newswires.
In late trading, profit-taking emerged after the Nikkei's winning streak, erasing early gains before the closing bell.
Yellen is to deliver a keynote speech later Friday at the Fed's annual conference in Jackson Hole, Wyoming, as investors speculate on the direction of US interest rates.
In Tokyo trade, export-related shares ended mixed. Toyota lost 0.78 percent to 5,943.0 yen on Friday but Nissan rose 0.24 percent to 1,015.0 yen. Sony rose 0.12 percent to 1,954.5 yen, while Sharp dropped 1.22 percent to 322.0 yen.
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