TOKYO (Reuters) - Asian stocks followed Wall Street lower on Friday as signs of a strengthening U.S. recovery boosted bets for higher inflation and an earlier tapering of Federal Reserve stimulus. U.S. Treasury yields jumped, lifting the dollar and hurting tech shares, after better-than-expected employment data overnight raised expectations for a strong reading for nonfarm payrolls on Friday, while a measure of service sector activity climbed to a record high. Japan’s Nikkei fell 0.8% early in the Asian session, while MSCI’s broadest index of Asia-Pacific shares outside Japan was off 0.3%. Chinese blue chips slipped about 0.1% at the open. On Wall Street, the S&P 500 lost 0.4%, while the Nasdaq Composite suffered a 1% slide. The Dow Jones Industrial Average fared relatively better, slipping 0.1%. U.S. stocks got some relief into the close on reports that President Joe Biden is willing to compromise over a proposed corporate tax hike. The 10-year Treasury yield rose as high as 1.6320% in Asia, after advancing nearly four full basis points overnight. The dollar index held Thursday’s 0.7% rally, its biggest since April, to hover around 90.50. “U.S. real rates have moved higher – not great for risk or sentiment,” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a note to clients. “Tech is looking pretty shaky.” While Fed officials have consistently said they expect current inflationary pressures to be transitory and for ultra-easy monetary policy to stay in place for some time, they are also increasingly touting the need to at least start talking about a tapering of stimulus. New York Fed President John Williams said on Thursday that the U.S. economy is still far from the point at which the central bank might begin to withdraw its support, although it makes sense for officials to begin discussing their options for adjusting policy. Fed Chair Jerome Powell speaks on central banks and climate change at a conference later in the global day. Investors are carefully parsing the economic data to gauge if inflation could prove sticky enough to force the Fed’s hand on tapering. Last month, much-weaker-than-expected nonfarm payrolls numbers knocked back those expectations, weakening Treasury yields and the dollar. This month, economists forecast private payrolls likely increased by 600,000 jobs in May, after rising only 218,000 in April. “Clearly, traders are covering USD shorts into the jobs data,” Pepperstone’s Weston wrote. “I am not even going to try and predict this one, it is a lottery, although the so-called ‘whisper number’ is closer to 790,000.” Gold remained weaker following a 2% tumble Thursday, its biggest since February, amid a stronger dollar. Crude oil retreated from more than two-year highs on Friday after weekly U.S. crude stocks fell sharply while fuel inventories rose more than expected. Brent futures fell 0.4% or 25 cents to $71.06 a barrel, after touching their highest since May 2019 earlier in Thursday’s session. U.S. WTI slipped 0.3% or 23 cents to $68.58 a barrel, from as high as $69.40 a day earlier, the strongest since October 2018. Editing by Sam Holmes Our Standards: The Thomson Reuters Trust Principles.