By Julie Zhu and Tom Westbrook

HONG KONG (Reuters) -Asian tech stocks tumbled on Tuesday and a regional equity gauge suffered its biggest slide in nearly two months after a selloff on Wall Street, as traders braced for U.S. inflation data amid worries growing price pressures might bring forward rate rises.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.7% by mid-session, its largest drop since late March, and Japan’s Nikkei fell 2.8%.

Selling was heaviest in Hong Kong, where the Hang Seng tech index fell 4% and dragged the broader market down 2%. That followed a 2.55% fall on the Nasdaq overnight, and Nasdaq 100 futures lost a further 1% in Asia trade.

“Markets reversed course overnight as inflation fears drove investors away from growth stocks, notably the tech stocks, to pick cyclicals amid the momentum of the economic recovery,” said Hong Hao, head of research at BoCom International.

Soaring commodity prices that have sent the cost of raw materials from copper to iron ore and lumber to record heights are the latest indicator that inflation may not be as transitory as some policymakers seem convinced. U.S. breakeven rates scaled multi-year peaks, even as profit taking dampened commodities.

A host of Federal Reserve speakers this week will be closely watched by markets to assess how authorities are likely to respond to receding risks posed by the coronavirus in some major economies.

A test case on U.S. inflation will come this week when the Labor Department releases its latest consumer price index report on Wednesday.

“Inflation’s shadow looms large and we do think that there is a limit to the Fed’s tolerance of inflation,” DBS Bank strategists said in a note on Tuesday.

“While the Fed has tolerated the rise in 10-year breakevens to 2.50%, we think that there could be a line in the sand if 5-year/5-year inflation swaps head towards 3.0%.”

Five-year TIPS breakevens hit 2.717% overnight. Benchmark 10-year Treasury yields eased slightly to 1.5914% in Asia trade. [US/]

Elsewhere in Asia, profit taking tipped Australia’s miner-heavy benchmark from Monday’s one-year high. China’s blue-chip CSI300 index fell 0.5% in morning trade. Tech conglomerates Tencent and Alibaba dropped by more than 3% in Hong Kong. Food delivery major Meituan fell 8.5% and has lost more than $30 billion in market value this week. Tech-exposed indexes in Seoul and Taipei fell 1.4% and 2.4% respectively.

Jim McCafferty, head of equity research in Asia at Nomura, said pressure on the tech sector as governments look to curtail big tech’s influence and find cash to foot the bill for stimulus spending was another factor weighing on the market.

“Paying the price of the pandemic will come down to those who are best positioned to afford to pay the price, and big tech are the wealthy corporate citizens of the world – that’s where I think governments will try and levy the cost of this pandemic.”

In currency markets speculation that growing price pressure would erode the dollar’s value kept the U.S. currency near a 2-1/2-month low. By early Tuesday, the dollar index, which measures the greenback against six major currencies, had pared losses to stand at 90.224.

A sluggish dollar helped sterling rally to $1.412, the highest since Feb. 25, despite Scotland’s leader saying another referendum on independence was inevitable after her party’s resounding election victory.

Oil prices gave up earlier gains as concerns that rising COVID-19 cases in Asia will dampen demand outweighed expectations that a major U.S. fuel pipeline could restart within the week following a cyber attack.

U.S. heating oil futures, which reflects prices for jet fuel and diesel, stood at 2.0074 a gallon.

U.S. crude dipped 0.68% to $64.48 a barrel. Brent crude fell to $67.83 per barrel.

Gold was slightly higher. Spot gold was traded at $1836.53 per ounce. [GOL/]

(Reporting by Julie Zhu and Tom Westbrook; Editing by Shri Navaratnam)