Tokyo -Tokyo investors next week will be watching a string of data, including industrial output and an expected sales tax hike that is central to the government's plans to fix the economy.
The Nikkei's 0.26% slip on Friday ended a week that saw the benchmark index rise a modest 0.12%, or 17.65 points, to 14 760.07, while the broader Topix index of all first-section shares lost 0.12% over the week, or 1.46 points, to 1 217.52.
The Japanese government will release industrial output for August on Monday, ahead of the Bank of Japan's Tankan business confidence survey on Tuesday.
Later in the day, Prime Minister Shinzo Abe will make his announcement on whether or not to press ahead with a three percentage point-jump in sales tax. He is widely expected to order the rise.
"The focus will be whether the recovery in production, led by sound domestic demand, will continue or not," Nomura Securities said in a statement, referring to the industrial output.
Abe's expected move to hike sales tax from 5.0% to 8.0% is seen as a crucial first step to taming Japan's huge national debt.
The conservative leader is also expected to offer a series of stimulus measures, including corporate tax cuts and spending programmes, to offset the impact of the tax hike, amid warnings it could smother a fragile consumer recovery.
"The BoJ's Tankan survey is supposed to be the final factor for the sales tax hike, but Prime Minister Abe is likely to announce the tax hike" in April 2014 along with economic stimulus measures to soften the blow, Nomura said.
Also in focus will be US manufacturing data due on Tuesday and US payrolls data due on Friday, as well as China's manufacturing index due on Tuesday, they said.
Another potential market lead is a budget stand-off on Capitol Hill that, if not resolved by midnight Monday, could see some parts of the US federal government shut down.
The Tokyo bourse has been weighed down of late by concerns that shares were overheated after a strong rally in recent weeks, driven by Tokyo's winning bid to host the 2020 Olympics.
The success stoked buying of construction and real-estate firms.
A rising yen also dragged the Tokyo market lower Friday, hitting exporters who benefit when the currency is weak.
The dollar bought ¥98.63 in afternoon Tokyo trade, down from ¥98.94 in New York Thursday afternoon.
In share trading, Lixil Group fell 2.24% to ¥2 052 after saying Thursday it would purchase German bathroom-fittings maker Grohe for about €3.06bn ($4.13bn).
Some analysts questioned the deal's benefits and the impact on Lixil's balance sheet.
Carbon fibre giant Toray Industries gained 1.58% to ¥644 after announcing it would buy smaller US rival Zoltek Companies for $584m.
In other trading, Toyota was down 1.07% to ¥6 440, Sony added 0.23% to ¥2 106 while banking giant Mitsubishi UFJ lost 1.37% to ¥644.