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GLOBAL MARKETS-Asian tech shares track Nasdaq gains as inflation fears recede

* Treasury yields retreat, lifting tech and growth stocks

* Taiwan paces equity gains in Asia while China stumbles

* Weaker U.S. economic data scuppers bets for early taper

* Bitcoin at $40,000 after plunge to $30,000 in wild week

TOKYO, May 21 (Reuters) - Asian tech and growth stocks rallied on Friday, following Wall Street’s overnight lead, as investors tempered fears about hot inflation and the prospects of an early tapering of stimulus by the Federal Reserve.

Japan’s tech-heavy Nikkei and Taiwan’s stock index stood out in the region - where equities were broadly mixed - with gains of 0.8% and 1.2% respectively.

Chinese blue chips lost 0.8%, however, weighed by financials and capping broader gains in the region.

Overall, MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.1%, putting it on track for a 1.9% weekly gain. The gauge’s tech components jumped 0.6% over the day.

Futures pointed to a further 0.3% rise for the S&P 500 later in the global day, following a more than 1% rise on Thursday.

Growth stocks led those gains as Treasury yields declined following a weaker-than-expected U.S. business activity reading. A pullback in commodity prices, particularly oil, also undermined the thesis for too-hot inflation.

The Nasdaq Composite was the big winner, soaring 1.8%, while the Dow Jones Industrial Average posted a 0.6% gain.

European stocks looked set to rally at Friday’s open, with Euro Stoxx 50 futures up 0.4% and FTSE futures rising 0.2%.

“It’s still a market trying to work out where inflation is going to go, and what that might mean for Fed policy somewhere down the line,” said Kyle Rodda, a market analyst at IG in Melbourne.

The Philadelphia Federal Reserve Bank said its business activity index fell to 31.5 from 50.2 in April, its highest pace in nearly half a century, casting doubt on how fast the economy can continue to heat up.

Other data on Thursday showed the number of Americans filing new claims for unemployment benefits dropped further below 500,000 last week, but jobless rolls swelled in early May, which could temper expectations for an acceleration in employment growth this month.

The yield on benchmark 10-year Treasury notes held Thursday’s more than 4 basis-point decline to hover around 1.632% in Asia.

Oil prices recovered slightly after steep drops on Thursday, when diplomats said progress was made toward a deal to lift U.S. sanctions on Iran.

Brent crude was 0.3% higher at $65.27 a barrel after slumping 2.3%. West Texas Intermediate crude added 0.4% to $62.21 a barrel following a 2.1% tumble.

In the foreign exchange market, the dollar was languishing near multi-month lows following its steepest slide in about two weeks on Thursday as bets of early U.S. rate hikes pared back.

The dollar index, which measures the greenback against six major peers, was at 89.755, little changed after the previous session’s 0.4% slump. For the week, it has tumbled 0.7%.

In cryptocurrencies, bitcoin traded just below $40,000 on Friday following a wild ride this week that saw it plunge as low as $30,066 on Wednesday for the first time since late January.

The digital token rebounded Thursday after prominent backers such as Ark Invest’s Cathie Wood and Tesla’s Elon Musk indicated their support.

Wednesday’s brutal selloff was triggered by worries over tighter regulation in China and unease about the extent of leveraged positions among investors.

No. 2 cryptocurrency ether was trading around $2,900 following a drop to as low as $1,850 on Wednesday.

For the week, bitcoin is down 14%, adding to the previous period’s 20% slide, while ether has fallen 23%.

Reporting by Kevin Buckland; Editing by Sam Holmes

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