Japanese markets fall sharply

Japanese markets fell sharply after a business survey showed slight improvement in outlook for manufacturers, spurring debate over whether the Bank of Japan will raise its benchmark interest rate next week.

The Nikkei average fell 0.95 percent to 39,470.44 after logging a two-month closing high in the previous session. The broader Topix index settled 0.95 percent lower at 2,746.56.

Heavyweights Fast Retailing and Tokyo Electron lost 2-3 percent. Oji Holdings surged 11.2 percent on share buyback news.

Industrial production in Japan increased less than initially estimated in October, the Ministry of Economy, Trade, and Industry said on Friday.

Industrial production rose a seasonally adjusted 2.8 percent month-on-month in October, faster than the 1.6 percent rebound in September. In the flash report, the rate of growth was 3.0 percent.

On a yearly basis, industrial production recovered 1.4 percent from a 2.6 percent fall a month ago.