Japan's Nikkei 225 Stock Average rose Friday but maintained a cautious tone as investors await the Greek elections.

The Nikkei rose 0.31 percent or 26.99 points to 8,595.88 and the Topix index rose 0.31 percent or 2.22 points to 727.88. Major gainers were DeNa Co Inc (14 percent), Nippon Shinyaku (2.5 percent), Kaken Pharmaceutical Co (2.5 percent) and Lawson Inc (1.7 percent).

Investors remained in a watchful mode due to concerns that the euro zone crisis could intensify again, depending on the outcome of Greece's election Sunday. They are worried that the Greek exit from the euro zone, which, if it happens, could significantly disrupt global financial markets.

Investors are worried that if the situation in the euro zone worsens, there is a greater probability that the yen will appreciate, affecting Japan's export-based economy adversely.

Market sentiments were down as the Bank of Japan (BOJ) said that it would not announce further monetary easing measures following its two-day policy meeting. Investors, who were expecting a coordinated response to the euro zone crisis by the major central banks, were discouraged by the announcement.

Market players sense that BOJ does not want to ease policy unilaterally on euro zone concerns. At the same time, it is expected to remain alert in order to respond in a coordinated manner with other central banks.

The last weekend's bailout of Spanish banks has reduced the chances of an imminent collapse in the euro. Recent data by the Cabinet Office on economic growth in Japan is mixed but broadly indicative of a pickup in the coming quarters. Therefore, investors feel that the BOJ must have decided to wait and respond depending on developments.

It is also critical to have the monetary easing at the right time as advance action may be poorly targeted and ineffective and may need to be repeated.