Japanese shares closed higher on Friday after Bank of Japan Governor Kazuo Ueda signaled a possible interest rate hike in December or January, with the timing seen depending on wage trends and yen movements.

The Nikkei 225 rose 2.12%, or 1,085.73 points, to end at 52,411.34.

The Bank of Japan kept its policy rate at 0.5% on Thursday as expected, but Governor Kazuo Ueda said confidence in the bank's outlook had strengthened, pointing to language often signaling a coming rate hike.

While noting global risks, the BOJ raised its growth forecast and maintained an upbeat view of Japan's recovery. Ueda also highlighted next year's wage negotiations as a key factor for any policy move.

In economic news, Japan's unemployment rate held at 2.6% in September, while the jobs-to-applicants ratio stayed at 1.20, the lowest since early 2022, government data showed Friday. Employment rose to a record 68.4 million as the labor force expanded to 70.1 million.

In Tokyo, core consumer prices rose 2.8% in October from a year earlier, beating forecasts and marking the fastest gain since July, reinforcing expectations for a Bank of Japan rate hike.

Industrial production rebounded 2.2% in September, led by machinery and chemical output, with manufacturers expecting a 1.9% rise in October and a 0.9% fall in November.

Retail sales increased 0.5% from a year earlier, recovering from August's drop, driven by strong demand for machinery, pharmaceuticals and cosmetics.

On the corporate front, Denso (TYO:6902) posted a 31% drop in half-year profit to 131.4 billion yen as EPS fell to 47.70 yen. Revenue rose 3.3% to 3.59 trillion yen. It declared a 32 yen interim dividend and cut its full-year profit forecast to 497 billion yen, while lifting its revenue outlook to 7.24 trillion yen.

Yamato Holdings (TYO:9064) reduced its half-year loss to 4.89 billion yen as revenue rose 7.9% to 906.8 billion yen. It declared a 23.00 yen interim dividend and expects full-year profit of 24 billion yen on revenue of 1.88 trillion yen.

Nomura Real Estate (TYO:3231) reported a 26% fall in half-year profit to 31.4 billion yen as revenue rose 4.3% to 397.7 billion yen. It declared an 18.00 yen interim dividend and expects full-year profit of 75 billion yen on 940 billion yen in revenue. Shares slipped 3.2%.