Stock markets diverged Monday with traders assessing the Federal Reserve's plans for interest-rate cuts and Europe's political landscape before looming general elections.

As US inflation takes longer to cool than expected, the Fed has signalled one rate cut this year, while analyst opinion varies from zero to three.

Traders are this week awaiting a US retail sales report, inflation figures and central bank rate decisions.

The Bank of England is expected to sit tight on Thursday, as is customary ahead of UK elections. Britons vote for a new government on 4 July.

Across the English Channel, there are concerns about the upcoming polls in France, which President Emmanuel Macron called after his party lost out to the far-right National Rally (RN) in EU-wide elections a week ago.

The move has fanned fears about instability in Europe's second-biggest economy, and observers said France could be on course for a standoff with the EU if extremists win.

"Uncertainty over the extent to which the far right RN party will have effective control of the next French parliament after July 7 will be an ongoing source of market angst," said Ray Attrill at National Australia Bank.

Worries about the election hammered Paris' CAC 40 index last week, pushing it down more than two percent Friday, which weighed on other European bourses.

Paris trading was largely steadier Monday, however, as was the case in Frankfurt and London, while the euro firmed.

In Asia, Tokyo closed down nearly two percent as investors took a risk-averse stance and fresh data fuelled worries about the US economy.

Investors sold down Tokyo shares on worries about French politics, concerns about the US economy and uncertainty over the Bank of Japan's policy outlook, analysts said.

"Investors are conscious of slowdown concerns surrounding the US economy" following data last week showing a fall in consumer sentiment, noted IwaiCosmo Securities.

"Political uncertainty in Europe was also shrinking investors' spirit," the brokerage said.