Key US job figures and a European Central Bank policy meeting will be among the key trading cues for Tokyo investors next week, analysts said. A solid reading for the employment data would likely boost expectations that the Federal Reserve will pull the trigger on a rate hike as early as next month.
The rate-rise speculation has gained pace as comments from US policymakers suggest they think that the world's top economy is strong enough to absorb higher borrowing rates.
"A US rate hike is now almost certain unless the job figures are very bad," said Toshikazu Horiuchi, a broker at IwaiCosmo Securities.
"We're also paying attention to the ECB meeting (on Thursday), so it's going to be an eventful week."
As the Fed gets set to tighten policy, ECB policymakers appear ready to go in the opposite direction with further stimulus measures to boost the struggling eurozone economy.
Investors are also looking for signs of more easing by the Bank of Japan after a string of tepid data Friday aggravated worries about the health of the world's number three economy.
A key inflation gauge showed Japan's consumer prices fell again in October from a year ago, while spending by households also dropped in a double blow for Prime Minister Shinzo Abe's high-profile growth blitz, dubbed Abenomics.
The weak figures dragged on the Tokyo market as the Nikkei 225 index finished down 0.30 percent, or 60.47 points, at 19,883.94 on Friday.
Over the week, the benchmark index was flat, edging up 0.02 percent.
The broader Topix index of all first-section shares fell 0.49 percent, or 7.87 points, to 1,594.45. It was down 0.54 percent over the week.
The Nikkei ended at a three-month high Thursday.
"Japanese stocks had risen mostly because short-term traders bid them up, but with the Nikkei 225 reaching the 20,000 mark, there was no reason to keep buying," Koji Toda, chief fund manager at Resona Bank, told Bloomberg News.
"Besides that, there aren't many catalysts or themes out there right now."
Regional sentiment also took a hit on news of a bigger-than-expected plunge in profits at China's industrial giants.
A slowdown in China's economy is a red flag for Japanese firms which count on it as a major market.