By Lisa Twaronite

TOKYO (Reuters) -- Asian shares slipped on Friday, ahead of key U.S. employment data later in the session that was expected to add to the case for a Federal Reserve interest rate hike as early as next month.

MSCI's broadest index of Asia-Pacific shares outside Japan edged down about 0.1 percent, though it remained on track for a 1 percent weekly rise.

Japan's Nikkei added 0.7 percent, poised for 0.8 percent weekly gain.

Wall Street marked modest losses after a mixed spate of earnings, as investors waited for the non-farm payrolls report.

Economists expect the report to show that U.S. employers added 180,000 jobs in October, which would be above September's increase of 142,000 jobs.

New U.S. applications for jobless benefits last week recorded their biggest increase in eight months, but remained above the threshold associated with a healthy labor market.

"We're a little below consensus," said Jennifer Vail, head of fixed-income research at U.S. Bank Wealth Management in Portland, Oregon.

But based on recent comments from central bank officials, "it looks as if as long as we hit a 150-number, the Fed will think it's consistent with labor tightening," she said, adding that U.S. yields and futures were increasingly showing expectations for a December hike.

Federal Reserve Chair Janet Yellen and New York Fed President William Dudley said this week that the U.S. was ready for higher interest rates if upcoming economic data justified them.

On Thursday, U.S. interest rates futures implied traders saw a 58 percent probability of a rate increase in December, according to CME Group's FedWatch program, while U.S. two-year Treasury yields hit their highest levels in 4-1/2 years.

Higher yields and rising expectations of a December rate hike lifted the dollar index, which last stood at 97.951, not far from a three-month peak of 98.135 scaled overnight.

The dollar was fetching 121.70 yen after touching a 2 1/2-month high of 122.01, while the was at $1.0884 after dropping to a nadir of $1.0834, its lowest level in more than three months.

The stronger dollar added further pressure to crude oil futures, which were already dragged down by oversupply concerns.

U.S. crude took back some lost ground, adding about 0.5 percent to $45.41 a barrel, but was still on track to lose 2.5 percent for the week.

Other commodities also struggled, with copper sliding to its lowest level in a month overnight. Spot gold steadied at $1,105.26 an ounce after plumbing a nearly two-month low on Thursday, and was on track to shed over 3 percent for the week.

(Editing by Shri Navaratnam)