 "Nikkei takes breather after Fed move; BOJ in focus")
The BOJ is expected to maintain its commitment to ultra-easy monetary policy, barely a day after the US Federal Reserve announced it will start to taper its massive stimulus from next month.
"The market moved passed a big event, so profit-taking is natural," said Kazuhiro Miyake, a chief strategist at Daiwa Securities, referring to the Fed taper decision.
"But there's more upside to the market as both macro funds which trade on a three-to-six month view and long-term investors who look at fundamentals are pouring money into the Japanese market."
Recent gainers retreated, with SoftBank Corp dropping 0.6% and KDDI Corp falling 2.7%. Brokerage firms Nomura Holdings dropped 0.8% and Daiwa Securities Group shed 0.5%.
The Nikkei dropped 0.4% to 15,795.26 in mid-morning trade after rising 1.7% to finish at 15,859.22 on the previous day, its highest close since December 2007. The benchmark rose 4.7% between Tuesday and Thursday.
For the week, the index has risen 2.5%.
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With Japanese markets closed for a national holiday on Monday and many foreign investors away for the Christmas break, trading is expected to remain subdued through to year-end, analysts said.
Daiwa's Miyake expects the Nikkei go above the 16,000-mark by year-end.
The Topix fell 0.3% to 1,259.08.
Exporters were mixed after a broad-rally on Thursday on the back of a weak yen. The dollar steadied at 104.29 yen, but still close to a five-year high of 104.37 yen touched in the wake of the Fed's announcement.
Nikon Corp rose 0.7%, Sony Corp added 0.3%, while Toyota Motor Corp shed 0.3%.
Namco Bandai Holdings rose 1.7% after UBS Securities upgraded its rating to 'buy' from 'neutral', citing growing game titles next year.
The Nikkei is up around 50% this year, driven by Tokyo's aggressive fiscal and monetary stimulus aimed at pulling the world's third-largest economy out of two decades of stagnation. The benchmark is on track for its best yearly rise since 1972.