Stock markets fell on Friday, with US indexes retreating from record highs as a key US inflation reading accelerated, lowering the possibility of sustained interest rate cuts in the coming months.

Investors widely expect a cut next month to bolster the world's largest economy after Fed chief Jerome Powell signalled last week the risks of labour market weakness in the world's top economy.

But the personal consumption expenditures (PCE) price index held steady at 2.6 percent in July, above the Fed's two-percent target, with the core reading that strips out food and energy accelerating slightly to 2.9 percent.

"The bad news is, inflation is continuing to inch higher, which isn't really the environment the Fed likely wants to cut in," said Bret Kenwell, an analyst at eToro.

Although a Sept

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