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TOKYO - Asian stocks rose on Friday, setting the region up for a weekly gain, as investors tempered fears about hot inflation and the prospects of an early tapering of stimulus by the Federal Reserve.

Japan's Nikkei jumped 1%, while MSCI's broadest index of Asia-Pacific shares outside Japan added 0.6%.

Taiwan's tech-heavy stock index climbed 1.8%, leading gains in the region, while Chinese blue chips added 0.3%.

For the week, an index of stocks across Asia-Pacific was set for a 1.9% advance.

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

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

"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 drop in oil prices accompanied by lower bond yields has changed sentiment very quickly, he said.

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. The reading was shy of economists' expectations of 43.0, a Reuters poll found, and cast 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 Dow Jones Industrial Average rose 0.6%, while the Nasdaq Composite added 1.8%.

The yield on benchmark 10-year Treasury notes held Thursday's more-than 4 basis-point decline to hover around 1.635% 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 0.2% higher at $65.21 a barrel after slumping 2.3%. West Texas Intermediate crude added 0.4% to $62.16 a barrel following a 2.1% tumble.

In the foreign exchange market, the dollar was hovering near multi-month lows following its steepest slide in about two weeks on Thursday.

The dollar index, which measures the greenback against six major peers, was at 89.755, little changed after the previous session's 0.4% decline.

In cryptocurrencies, bitcoin recovered to around $41,650 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 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 over 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.