Major stock markets mostly dropped Thursday as Europeans gears up for key elections, the US awaits inflation data and Japan contemplates measures to strengthen the yen.

The Japanese currency edged up against the dollar after hitting a 38-year low Wednesday, putting investors on alert for a possible intervention by Japanese authorities.

The Japanese unit's latest retreat came as uncertainty surrounded the Federal Reserve's timetable for cutting interest rates, and the Bank of Japan's caution in tightening monetary policy.

Traders sold equities as tech firms face pressure amid concerns that a long-running rally in the sector may have been overdone.

Investors were meanwhile awaiting outcomes in French and British general elections due over the next week.

"Today sees the US economy come into sharp focus, with the final GDP and core durable goods orders data released ahead of tomorrow’s crucial core PCE inflation release," noted Joshua Mahony, chief market analyst at Scope Markets.

"Signs of weakness in the jobs market have started to spread through alternate areas of the economy, with yesterday's new home sales figure falling to a 2024 low."

A forecast-busting read on the PCE index, the Fed's favoured gauge of inflation, could push back expectations for a rate reduction and put further upward pressure on the dollar.

In Japan, vice finance minister Masato Kanda said this week that authorities were keeping a close eye on movements in foreign exchange markets and were ready to step in with yen support 24 hours a day.

Their determination was put to the test after the yen fell to 160.87 per dollar late Wednesday -- its weakest since 1986 -- as US Treasury yields spiked.

Analysts say it is possible traders will keep pushing the envelope to see at what point the government will act, with some saying the unit could hit 170.

In Europe, France's political future was up in the air with the far right surging in polls but other forces fighting to the end three days before a high-stakes parliamentary vote.

It comes ahead of a UK national vote on July 4, with the right-wing Conservatives led by Prime Minister Rishi Sunak on course to lose power to the centre-left Labour party.