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UPDATE 1-Kobe Steel executives to decide whether to resign after external probe - sources

probe - sources@

* Executives to decide futures after external report

* Internal report may be released Friday

* Kobe Steel shares fall 2.5 percent (Adds share price, background)

TOKYO, Nov 6 (Reuters) - Kobe Steel executives, including President Hiroya Kawasaki, will decide whether to resign to take responsibility for a cheating scandal after a report from independent investigators due by year-end, two sources told Reuters.

The company also plans to release an internal report on the falsification of product specifications around Friday, said one of the sources, who has been briefed on the matter.

The other source is a senior executive at Kobe Steel. Both requested anonymity because decisions on the future of the executives and a firm date for the release of the report have been not been finalized.

Kobe Steel's admission last month that workers had tampered with product specifications for at least a decade has sent global carmakers, airplane manufacturers and other companies racing to check whether the safety or performance of their products have been compromised.

The company was ordered by Japan's Ministry of Economy, Trade and Industry (METI) last month to provide a detailed explanation of the data cheating and steps to prevent future abuses by around Nov. 12.

It later appointed a team of outside investigators, who are due to report to management by the end of the year.

"We received an instruction from METI on Oct. 12 to take steps to find the cause of the problem and craft preventive measures within a month and we are working toward that," a spokesman told Reuters by phone on Monday.

"We can't comment on whether we will announce this on the 10th and we can't comment on the issue of management responsibility," the spokesman said.

Kobe, which is now the subject of a U.S. Justice Department inquiry, has had a Japanese government-sanctioned seal of quality revoked on some of its products and lost customers.

No safety issues have so far been identified from the data cheating, which mainly involves falsely certifying the strength and durability of products.

The company has also said it cannot yet fully state what impact the tampering will have on its finances. Last week, it pulled its forecast for its first annual profit in three years for the 12 months through next March.

Its shares have fallen by nearly a quarter since it revealed the fabrication nearly a month ago. They were down 2.5 percent by 0500 GMT on Monday, while the benchmark Nikkei 225 index was flat. (Reporting by Yuka Obayashi and Ritsuko Shimizu; Writing by Aaron Sheldrick; Editing by Raju Gopalakrishnan and Richard Pullin)