European stock markets fell Friday as investors digested mixed economic data, while shares in UK banks and the pound dropped on reports the sector could face a windfall tax.

The Dow and the S&P 500 hit fresh record highs Thursday on Wall Street after an upward revision to US growth in the second quarter and bumper results from AI chip giant Nvidia.

Friday sees the release of key US inflation data, which could provide further guidance on interest rates after Federal Reserve chief Jerome Powell signalled a cut was likely in September.

"Markets are pricing in around a high probability of a cut by the Fed next month, and today's... inflation numbers will be a key data point for monetary policy setters," said Derren Nathan, head of equity research at Hargreaves Lansdown.

"Markets are keepin

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