Stock markets mostly drop, yen gains after 38-year low

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Major stock markets mostly dropped Thursday as Europe 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.

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

Wall Street opened mixed ahead of the first debate presidential between Joe Biden and Donald Trump.

The debate, to take place on Thursday evening, "has imbued the market with a bit of a wait-and-see attitude", said Briefing.com analyst Patrick O'Hare.

Investors were also looking forward to the release on Friday of the PCE index, the US Federal Reserve's preferred measure of inflation.

Data out Thursday showed a modest increase in continuing unemployment benefits claims and a drop in business investment spending.

O'Hare said "today's data was generally on the softer side of things, prompting a drop in Treasury yields and some improvement in the equity futures market, which has leaned on the notion that a rate cut before November could still be possible".

Wall Street's tech-heavy Nasdaq Composite index edged higher despite concerns that a long-running rally in the tech sector may have been overdone.

Shares in chip manufacturer Nvidia, whose processors are prized for AI applications and drove the tech rally, fell by more than one percent at the start of trading.

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 currency 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 expected to lose power to the centre-left Labour party.

- Key figures around 1330 GMT -