Key TOCOM rubber futures ended down 0.4 percent on Friday as a pick-up in Chinese inflation and a decline in the Shanghai market prompted profit-taking that pulled the index off a nine-month high hit earlier in the day.
The rubber futures had climbed to 321 yen, their highest since April, on comments made by the Japanese prime minister that renewed expectations of monetary easing and pushed the yen to a 2-1/2 year low.
Some analysts, though, cautioned the market is unstable and selling pressure is strong ahead of the Lunar New Year in China.
"The current prices are unlikely to be sustained. Chinese buyers would step back ahead of the New Year holiday in February and prices could return to a range of 295-305 yen," said Kaname Gokon, general manager at trading house Okato Shoji Co.
Key TOCOM rubber futures settled down 1.1 yen, or 0.4 percent, at 312.2 yen per kg.
The most active Shanghai rubber contract for May delivery closed down 1.9 percent at 25,710 yuan per tonne.
The front-month February contract on the SICOM in Singapore was last traded at 303.5 U.S. cents per kg, down 1.2 percent.
China's annual consumer inflation rate accelerated to a seven-month high of 2.5 percent in December on rising food prices, narrowing the scope for the central bank to boost the economy by easing monetary policy.
Japan's benchmark Nikkei stock average closed up 1.4 percent at a 23-month high as the yen's slide boosted exporters. Japanese financial markets will be closed on Monday for a public holiday.
The dollar jumped to 89.35 yen, its highest since June 2010, on strengthening speculation Japan's Prime Minister Shinzo Abe will exert strong pressure on the Bank of Japan to pursue aggressive easing steps. Abe said in an interview with the Nikkei newspaper on Friday that the BOJ should consider maximising employment as a monetary policy goal to help boost the economy.
Brent crude futures fell further below $112 a barrel on Friday on concerns that faster-than-expected inflation in Chinawill limit room for further policy easing to boost growth in the world's second-biggest oil consumer.
Vehicle sales in China are set to rise 7 percent in 2013, a third straight year of single-digit growth, an industry association said on Friday, as the fallout from a diplomatic spat continues to weigh on Japanese automakers.
Indonesia's 2013 rubber output will rise 7 percent on the year to 3.2 million tonnes due to higher yields, the rubber industry body in the world's second-largest producer said on Friday, with exports seen little-changed at 2.7 million tonnes.
