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 per cent, while MSCI's broadest index of Asia-Pacific shares outside Japan added 0.6 per cent.

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

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

Futures pointed to a further 0.3 per cent rise for the S&P500 later in the global day, following a more than 1 per cent jump on Thursday.

Tech stocks led those gains as Treasury yields declined following a weaker-than-expected US 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 per cent, while the Nasdaq Composite added 1.8 per cent. The yield on benchmark 10-year Treasury notes held Thursday's more-than 4 basis-point decline to hover around 1.635 per cent in Asia.

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

Brent crude was 0.2 per cent higher at $65.21 a barrel after slumping 2.3 per cent. West Texas Intermediate crude added 0.4 per cent to $62.16 a barrel following a 2.1 per cent 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 per cent 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 sell-off 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.

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