Shell Programming and Scripting

I have a script which will take two file as the inputs and take the Value in file1 and search in file2 and give the output in Outputfile.
#!/bin/sh
#. ${HOME}/crossworlds/bin/CWSharedEnv.sh
FILE1=$1
FILE2=$2
for Var in $(cat $FILE1);do
echo $Var
grep -i "$Var" $FILE2
done > Outputfile

I have tried awk "/$Var/" $FILE2 instead of grep -i "$Var" $FILE2.But gives the same results.

My File2 contains lines with Japanese characters.

But the problem here is the Outfputile shows some lines with 1004 bytes and some lines correctly.
For more clarity I have attached the files FILE1,FILE2 and Outputfile.

To view the Japanese characters correctly you have to use texpad that is Unicode enabled and rightclick and goto properties change the font to unicode japanese.
For the same lines length in File1 is different from Outputfile.
Can anyone explain me what is the problem here and the solution for the same?

Code:

#!/bin/ksh
# $1= file with lines of strings to search for
# $2 = file to grep through 
grep -f $1 $2

Thanks.But the script you suggested is giving the same output with some lines as 1004 bytes