Global stocks mostly fell Thursday, as investors weighed worries about inflation with improving labor data and took profits following recent Wall Street records.
US Treasury Secretary Janet Yellen told CNBC that inflation will remain elevated in the United States for months to come but eventually retreat.
"It is important that we monitor it carefully, but I believe fundamentally, that this is something that will settle down," Yellen said after markets closed, following reports earlier this week showing spiking producer and consumer prices in June.
Traders kept an eye on the second day of congressional testimony from Federal Reserve Chair Jay Powell, who reiterated the central bank's plan to maintain stimulus initiatives until the economy fully recovers.
Earlier, Michael Saunders, a member of the Bank of England's monetary policy committee, said in a speech the central bank could wind down its asset purchases in light of higher inflation.
The remarks came as British data showed unemployment dipped to 4.8 percent in the three months to the end of May from 5.0 percent in the three months to February.
However, jobs vacancies are soaring as businesses struggle to recruit sufficient staff, the data showed.
Major European bourses fell around one percent, while two of the three major US indices also retreated, with analysts pointing to profit taking following a series records in anticipation of earnings season.
"This could be a classic case of buy the rumor and sell the news," said Adam Sarhan of 50 Park Investments. "It's perfectly normal and healthy to see sellers show up after a big move up."
The Nikkei index in Tokyo gave up 1.2 percent earlier, with investors still concerned about the virus situation in Japan.
Meanwhile, Beijing released a raft of data Thursday that indicated solid but slowing growth.
China's economic growth slowed to 7.9 percent in the second quarter, down from 18.3 percent in the previous three months when activity roared back to life after last year's pandemic-enforced shutdown.
However, other Chinese data on retail sales and industrial production came in stronger than expected, somewhat offsetting the weaker GDP figure, analysts said.
"China's second-quarter GDP figures were slightly better than expected, but there is still a sense of unease about the country's economic outlook," said Danni Hewson, financial analyst at AJ Bell.
"A similar feeling is spreading to other countries and suggesting that the post-Covid rebound may find it harder to keep going at a strong pace."
New York - Dow: UP 0.2 percent at 34,987.02 (close)
New York - S&P 500: DOWN 0.3 percent at 4,360.03 (close)
New York - Nasdaq: DOWN 0.7 percent at 14,543.13 (close)
London - FTSE 100: DOWN 1.1 percent at 7,012.02 (close)
Frankfurt - DAX 30: DOWN 1.0 percent at 15,629.66 (close)
Paris - CAC 40: DOWN 1.0 percent at 6,493.36 (close)
EURO STOXX 50: DOWN 1.1 percent at 4,056.39 (close)
Tokyo - Nikkei 225: DOWN 1.2 percent at 28,279.09 (close)
Hong Kong - Hang Seng Index: UP 0.8 percent at 27,996.27 (close)
Shanghai - Composite: UP 1.0 percent at 3,564.59 (close)
Euro/dollar: DOWN at $1.1813 from $1.1837 at 2100 GMT Wednesday
Pound/dollar: DOWN at $1.3832 from $1.3860
Euro/pound: UP at 85.41 from 85.40 pence
Dollar/yen: DOWN at 109.82 from 109.97 yen
Brent North Sea crude: DOWN 1.7 percent at $73.47 per barrel
West Texas Intermediate: DOWN 2.0 percent at $71.65 per barrel
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