Stock markets mainly dropped on Friday, with investors focused firmly on the outlook for interest rate hikes as central banks battle to bring down sky-high inflation.

The dollar rose against main rivals, while oil prices slid more than two per cent as traders assessed the risk of a possible global recession.

European gas prices pushed higher after a record-close on Thursday as the Ukraine war impacts supplies.

Elsewhere, bitcoin slumped nearly seven per cent as investors shunned risky assets.

A two-month equity markets rally from June lows appears to have run out of steam, with downward pressure coming after minutes from the Fed's most recent meeting showed policymakers are determined to keep lifting borrowing costs until prices are brought under control.

The gains have come in the face of a number of problems that have caused unease on trading floors, including China-US tensions, the Ukraine war, supply chain snarls and extreme weather across much of the northern hemisphere.

A statement by policymakers and comments from Fed boss Jerome Powell after last month's board meeting suggested they could be considering slowing the pace of rate hikes as the economy slows.

That was followed by a drop in inflation, which lifted markets, but was followed by several officials reasserting the need to continue to tighten monetary policy to get inflation down from four-decade highs.

This week's minutes and comments from a number of Fed top brass reinforced that view, with some pouring cold water on hopes for possible rate cuts in the new year.

All eyes are now on next week's central bankers' symposium in Jackson Hole, Wyoming, where finance chiefs and central bankers will speak, with all attention on the utterances of Powell.

Wall Street's three main indices edged up on Thursday after the previous session's losses, while Asian and European markets mostly fell heading into the weekend pause.

OANDA's Edward Moya warned that markets would remain wobbly for a while. "Stocks will most likely struggle for direction for the rest of the summer as Wall Street is still uncertain with how aggressive the Fed will be in September," he noted.

Stocks will most likely struggle for direction for the rest of the summer as Wall Street is still uncertain with how aggressive the Fed will be in September- OANDA's Edward Moya

"Traders however will continue to pay close attention to developments with the war in Ukraine."

Lewis Grant, of Federated Hermes, added that "investor risk appetite remains fragile".