Asian markets were mixed on Friday as Japanese stocks fell sharply ahead of the US Federal Reserve's policy meeting next week.

The Fed's two day Federal Open Market Committee meeting, beginning 30 July, could provide more clarity on the future pace of US monetary stimulus.

The Japanese Nikkei was trading 2.65% lower or 385.96 points to 14,176.97.

Australia's S&P/ASX index was trading 0.31% higher or 15.20 points to 4,996.90.

The Shanghai Composite index was trading 0.25% lower or 4.96 points to 2,016.21.

Hong Kong's Hang Seng was trading 0.15% higher or 33.45 points to 21,934.41.

South Korea's Kospi was trading 0.03% higher or 0.55 points to 1,910.16 points.

In Japan, government data showed that consumer prices in June rose at their fastest annual pace since November 2008, suggesting that inflation in Asia's third largest economy is picking up speed, after two decades of deflation. The core consumer price index rose 0.4% year-on-year in June, entering positive territory after a flat reading in May.

In China, central bank governor Zhou Xiaochuan has said the bank would continue to operate a practical monetary policy and help improve financing conditions for small firms

Earlier this week, China's cabinet announced minor stimulus measures to boost slowing growth in the world's second largest economy. Beijing said it would eliminate taxes on small businesses, reduce costs for exporters and increase government investments in the railways.

Beijing is trying to steer the economy towards domestic consumption and demand, and away from its dependency on manufacturing and exports. China's labour ministry warned on Thursday that the transition could lead to job losses.

Wall Street Up

On Wall Street, indices posted modest gains on Thursday. The Dow finished 13.37 points higher at 15,555.61, led by energy major Chevron.

The S&P 500 closed 4.31 points higher at 1,690.25, while the Nasdaq ended 25.59 points higher at 3,605.19.

Company Stock Movements

In Tokyo, Advantest, which manufactures automatic test equipment for the semiconductor industry, tanked 9.8% after it reported a 3.6bn yen ($36m) loss in the April to June quarter.

Automobile majors Toyota and Honda Motorshed 2% each

Suzuki Motor fell 1.9% in a downbeat market in spite of upbeat results at its Indian subsidiary.

Maruti Suzuki, India's biggest carmaker, reported a 49% jump in net profit in the April to June first-quarter. Lower sales were counterbalanced by cheaper imports from Japan owing to a decline in the value of the yen.

Rival automaker Nissan was down 1.7% even after reporting a 14% increase in quarterly profit

Mitsubishi UFJ Financial Group dropped 4.1%, despite a Nikkei newspaper report that Japan's three 'megabanks' had probably logged a 20% increase in quarterly profits.

Rival Sumitomo Mitsui Financial Group was down 3.5%, while Mizuho Financial Group shed 2.8%.

In Seoul, index heavyweight Samsung Electronics shed 0.5%. The company reported a 50% jump in profit for the April to June second quarter. However, smartphone sales showed signs of slowing down.

Shares of Kia Motors and rival and part owner Hyundai Motor gained 1%, buoyed by better-than-expected earnings update from US-based General Motors.

Asia's fourth-biggest steelmaker Steelmaker POSCO inched up 0.2% after it reported a 51% drop in second-quarter profit as weak demand cut prices.

Cash-strapped South Korean steelmaker Posco confirmed that it will still build a mega steel plant in India despite a raft of issues that has led shareholders to question the validity of the project.

In Shanghai, China Merchants Bank lost 1% and Bank of Nanjingshed 0.7%.

In Hong Kong, China Railway Construction dropped 1.6%. China Railway Group was down 1.2%.

The two companies' Shanghai-listed shares fell 1.6% and 2.3% respectively.

Beijing said on 24 July it would increase government investments in the railways. The news boosted rail stocks in Shanghai and Hong Kong on 25 July

In Sydney, Westpac moved up 2%. Banking major Australia and New Zealand Banking Group gained 1.5%, while National Australia Bank added 1.1%.

Iron ore miners Mount Gibson and Atlas Iron dropped 2.3% each on concerns surrounding weaker demand in China.