* Wall Street slumps on concerns about U.S. tax reform bill
* Nikkei skids, on track for weekly loss, as yen strengthens
* U.S. crude oil futures extend overnight gains
TOKYO, Dec 15 (Reuters) - Asian shares erased earlier modest gains on Friday but were still on track for a weekly rise, as sentiment was hurt by Wall Street's weakness on concerns about the progress of U.S. tax reform.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.5 percent, but poised to gain 0.7 percent for the week.
Chinese shares slumped, with the Shanghai Composite index off 0.9 percent and the blue-chip CSI300 index down 1 percent.
Japan's Nikkei stock index was down 0.1 percent, off its session lows, but still down 0.6 percent for the week, even amid fresh signs the economy is gathering momentum.
Big Japanese manufacturers' business confidence improved for a fifth straight quarter in the three months to December to hit an 11-year high, the Bank of Japan's quarterly tankan survey showed.
"The Nikkei came off its lows in the afternoon, largely on futures-led buying," said Ayako Sera, senior market economist at Sumitomo Mitsui Trust. "But regional sentiment is still fragile, which will limit its upside."
On Thursday, U.S. retail sales increased more than expected in November and the number of Americans filing for unemployment benefits dropped to near a 44-1/2-year low last week. That pointed to sustained strength in the economy that could pave the way for further Federal Reserve interest rate hikes next year.
The Fed hiked interest rates on Wednesday but left its rate outlook for the coming years unchanged even as policymakers projected a short-term jump in U.S. economic growth from the Trump administration's proposed tax cuts.
"The Fed's move this week was largely perceived as a dovish hike," said Bill Northey, chief investment officer at the private client group of U.S. Bank in Helena, Montana.
"It was ultimately well within expectations, and I think the one surprise was how strong the upgrade was for 2018 without any corresponding upgrade for their expectations for inflation," he said. "That keeps our expectations around three rate hikes for 2018."
On Wall Street on Thursday, major U.S. stock indexes fell, with the S&P 500 down the most in a month, as investor worries over potential roadblocks to the Republicans' tax overhaul more than offset optimism over the strong data.
Republicans in the U.S. Congress reached a deal this week on a final version of their debt-financed legislation to cut taxes for businesses and wealthy Americans, with House and Senate votes expected early next week. But the bill has yet to get needed support of some key Senators, and investors worry about downward pressure on stocks if the bill were to fail.
The dollar index, which tracks the greenback against a basket of six rival currencies, was up 0.1 percent at 93.606 , down 0.3 percent for the week.
The dollar steadied against the yen at 112.38, nearly flat on the day but down 1 percent for the week, and moving away from a one-month high of 113.75 yen touched on Tuesday.
The euro was steady at $1.1780. On Thursday, the European Central Bank raised growth and inflation forecasts for the euro area, but stuck with its pledge to provide stimulus for as long as needed.
Sterling was steady at $1.3436. The Bank of England also left interest rates unchanged on Thursday, as expected.
Bitcoin was up 4.1 percent on the Bitstamp exchange at $17,082.37, after earlier matching a record high of 17,428.42 set on Tuesday.
Crude oil futures extended gains, after rising on Thursday as a pipeline outage in Britain continued to support prices despite forecasts showing global crude surplus in the beginning of next year.
U.S. crude added 0.3 percent, or 15 cents, to $57.19 a barrel, after gaining 0.8 percent overnight. Brent crude futures were up 0.1 percent, or 5 cents, at $63.35.
(Reporting by Lisa Twaronite; Editing by Sam Holmes)