(Updates prices throughout, adds Micron Technology ( MU ) in paragraph

3 and Wall Street futures in 7)

By Elizabeth Howcroft

LONDON, June 27 (Reuters) - European stocks fell on

Thursday as traders were cautious ahead of key inflation data,

while markets were also on alert for signs of Japanese

authorities intervening in the yen after further declines in the

currency.

Investors have become more worried about inflation following

a surprise jump in inflation data in Australia on Wednesday and

in Canada on Tuesday.

Equity markets were also hit by falling semiconductor

stocks, after investors were disappointed by chipmaker Micron

Technology's ( MU ) revenue forecast on Thursday.

At 1138 GMT, the MSCI World Equity index was down 0.1%

.

The pan-European STOXX 600 was down 0.2%, steadying somewhat

after two days of declines.

London's FTSE 100 was down 0.3%, but Germany's DAX

was up 0.3%.

The downbeat mood looked set to continue in Wall Street,

with Nasdaq futures down 0.2% and S&P 500 futures also

down 0.2%.

Traders are waiting for Friday's U.S. personal consumption

expenditures (PCE) data, which is the U.S. Federal Reserve's

preferred inflation measure and could help traders determine the

outlook for the Fed's interest rate.

France, Italy and Spain will also release inflation data on

Friday.

"No one's really going to be wanting to take any large

positions ahead of tomorrow's inflation data," said Fiona

Cincotta, senior markets analyst at City Index.

"In Europe you've got the political uncertainty which is

also limiting any upside ahead of the French elections," she

added.

The first round of French parliamentary elections will take

place on Sunday.

Euro zone government bond yields were up at their highest in

two weeks. The benchmark German 10-year yield was up 2 basis

points at 2.466%.

The risk premium on French debt was near a seven-year high

as markets worried about the risk of far-right or far-left

parties winning the elections.

U.S. Treasury yields were also up, with the 10-year U.S.

Treasury yield up 2 basis points at 4.3313%.

Expectations for U.S. rate cuts have been pushed back by

stubborn inflation and strong economic data. U.S. jobless claims

data are due later in the session.

"If we get lower than expected jobless claims that could

really add fuel to the fire that the Fed may not even cut rates

this year," City Index's Cincotta said.

YEN WATCH

The Japanese yen was near to its weakest in 38 years versus

the U.S. dollar, keeping markets on alert for any sign of

intervention.

The dollar-yen pair was trading at 160.505, with the yen

having strengthened slightly since the pair's peak of 160.88 on

Thursday.

Japan's finance minister said he would take any necessary

action on currencies, and that Japanese authorities were "deeply

concerned" about the effect of the yen's drop on the economy.

ING said in a note that authorities may have an incentive to

wait until after Friday's U.S. PCE data before intervening.

"Should US data fuel more USD strength, then intervention

would become almost inevitable - but with the new line in the

sand potentially closer to 165," ING FX strategist Francesco

Pesole wrote.

The U.S. dollar index was a touch lower on the day at 105.89

. The euro was up 0.2% at $1.07005.

Oil prices were a little higher, with Brent crude futures

up 0.5% at $85.68 a barrel. U.S. West Texas Intermediate

crude futures were up 0.4% at $81.25 per barrel.

Gold was up 0.8% at $2,316.36.