LONDON: European and US stock markets dropped Thursday as traders tracked developments surrounding the Omicron coronavirus variant and fallout from the Chinese property crisis.

The Dow dipped less than 0.1 percent in late morning trading despite data showing new filings for US unemployment aid dropped sharply last week, bringing them to levels not seen since 1969 for the second time this year.

London's benchmark FTSE 100 index shed 0.2 percent after the UK government tightened virus restrictions in England as Omicron variant cases surge, including guidance to work from home and mandatory Covid passports.

The British pound also took a knock.

"News that fresh social restrictions are being imposed in the UK... have put a brake on the rebound of not just travel stocks but bricks-and-mortar retailers, and hospitality firms," noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

It comes as Britain and other countries are fighting against surging inflation, further threatening economic recovery.

Investors were awaiting Friday's US consumer price index data as the Federal Reserve mulls the timing of US interest rate rises to tackle strong inflation.

"It is clear that the momentum we saw at the start of the week has well and truly faded," said analyst Fawad Razaqzada at ThinkMarkets.

"Investors are wary of the major central bank meetings coming up next week and are unwilling to have too much exposure ahead of those," he added.

Brazil's central bank on Wednesday hiked its benchmark interest rate by a whopping 150 basis points for the second straight time, even as Latin America's biggest economy is stuck in recession.

On Thursday, China reported that its consumer price inflation reached the highest level in more than a year in November.

Focus was on also the debt crisis in China's property sector.

Two major Chinese property firms have defaulted on $1.6 billion worth of bonds to overseas creditors, Fitch Ratings agency said Thursday, as contagion spreads within the country's debt-ridden real estate sector.

Fitch confirmed Evergrande defaulted for the first time on more than $1.2 billion worth of bond debt, as it downgraded the firm's status to a restricted default rating.

Fitch also confirmed Kaisa, a smaller property company but one of China's most indebted, had defaulted on $400 million of bonds.

Elsewhere Thursday, Italy's antitrust authority said it had fined Amazon 1.1 billion euros ($1.3 billion) for allegedly abusing its dominant position in e-commerce logistics.

Bitcoin fell back under $50,000.

"There are several reasons why cryptos have been coming under pressure of late," said ThinkMarkets' Razaqzada.

In addition to concerns about the economic impact of the omicron virus hurting all sorts of risk assets, central banks are reducing or withdrawing stimulus, which means there will be progressively less money flooding the financial markets, he said.