Hong Kong's Hang Seng Index led Asian losses as market-heavyweight Alibaba was hammered

London (AFP) - European stock markets ended up but Wall Street wavered on Friday as investors struggled to end the week on a high note after cooling inflation raised hopes of an end to interest rate hikes.

The Dow Jones Industrial Average was down while the S&P 500 and tech-heavy Nasdaq were in the red by late morning trade.

European markets were up in afternoon deals, with London leading gains as it closed up more than one percent despite data showing an unexpected drop in retail sales in October.

Hong Kong closed down 2.1 percent, with shares in Chinese e-commerce titan Alibaba hammered after the company cancelled a spinoff of its cloud computing arm, citing the US-China chip war.

Crude prices also gained after falling almost five percent on Thursday due to weak demand expectations amid China’s softening economy.

Weaker-than-expected US inflation data this week fanned hopes that the Federal Reserve would not need to hike interest rates further before cutting.

The data gave a strong boost to global stock markets earlier in the week.

UK inflation also slowed more than expected.

“There is increasing optimism amongst investors that interest rates are at a peak, and that inflation would continue to ease, considering energy prices are on the decline,” said Richard Flax, chief investment officer at Moneyfarm.

However, traders remain on edge that the Federal Reserve has left the door open to a possible hike as inflation remains elevated and despite warnings that the world’s top economy could be in danger of slipping into recession.

Those worried about a downturn pointed to US unemployment benefits being at their highest in two years, factory production dropping more than forecast and homebuilder sentiment at its weakest in 2023.

- Key figures around 1645 GMT -

New York - Dow: DOWN 0.2 percent at 34,893.13 points

London - FTSE 100: UP 1.3 percent at 7,504.25 (close)

Paris - CAC 40: UP 1.0 percent at 7,233.91 (close)

Frankfurt - DAX: UP 0.8 percent at 15,919.16 (close)

EURO STOXX 50: UP 0.9 percent at 4,340.03

Tokyo - Nikkei 225: UP 0.5 percent at 33,585.20 (close)

Hong Kong - Hang Seng Index: DOWN 2.1 percent at 17,454.19 (close)

Shanghai - Composite: DOWN 0.1 percent at 3,054.37 (close)

Euro/dollar: UP at $1.0874 from $1.0851 on Thursday

Pound/dollar: UP at $1.2416 from $1.2411

Dollar/yen: DOWN at 149.74 yen from 150.76 yen

Euro/pound: UP at 87.58 pence from 87.41 pence

West Texas Intermediate: UP 2.2 percent at $75.08 per barrel

Brent North Sea crude: UP 2.3 percent at $79.81 per barrel