TOKYO, May 24 (Reuters) - Japan's Nikkei share average sank on Friday, tracking declines on Wall Street after robust U.S. economic data stoked bets that stubborn inflation may delay Federal Reserve interest rate cuts.

The Nikkei sagged 1.2% to 38,624.59 as of 0145 GMT, and had earlier dipped as much as 1.9%.

The broader Topix dropped 0.6%.

All three main U.S. equity indexes declined overnight, led by a 1.5% slump for the Dow, after U.S. manufacturers reported a surge in prices for a range of inputs, suggesting that goods inflation could pick up in the months ahead.

The benchmark U.S. 10-year bond yield climbed to a more than one-week peak of 4.498% as traders pared back bets to a likely single quarter-point rate reduction this year, from a consensus for two cuts previously.

"It definitely seems, at least in the short term, that moves in Japanese stock prices are in the hands of U.S. yield levels," Kazuo Kamitani, an equities strategist at Nomura Securities said.

While stocks were firmly down on Friday, the strategist pointed to support from the Nikkei's 25-day moving average at around 38,300 as holding firm in the morning.

And with the indicator set to turn upward from the close of trading, "the Nikkei could potentially hold at current levels or even flip to gains from next week", he said.

For the week, the Nikkei is on course for a 1.2% slide, but would remain up more than 15% this year, keeping it squarely among the top performing markets globally.

It rose to an all-time high of 41,087.75 on March 22 before pulling back over the following month to as low as 36,733.06.

On Friday, chip stocks that had rallied the previous day on the back of Nvidia earnings retreated sharply to be among the Nikkei's worst performers.

Advantest dropped 3.5%, Tokyo Electron fell 2.4% and Lasertec lost 3.5%. (Reporting by Kevin Buckland; Editing by Mrigank Dhaniwala)