Portugal Colonial - Stocks diverge after Powell says rate hike possible

US stocks opened higher after falling the previous day on the back of Federal Reserve Chair Jerome Powell saying that the US central bank "will not hesitate" to raise interest rates again if necessary.

European markets remained down in afternoon deals, however, as European Central Bank President Christine Lagarde said there will probably be a "resurgence" of inflation after it slowed sharply last month.

Speaking at a Financial Times event, Lagarde also said that the ECB will not start cutting rates for at least "the next couple of quarters".

Data showing the UK economy stalled in the third quarter also weighed on London's FTSE 100 index.

Both the Fed and ECB paused their rate-hike campaigns at their last meetings as consumer price rises have slowed, but they have suggested they would stay higher for longer as inflation remains above their two-percent targets.

Equities had been rallying since last week after Fed officials hinted that their long-running tightening cycle may be at an end.

But Powell told an International Monetary Fund conference Thursday that progress toward reaching two-percent inflation was "not assured".

"If it becomes appropriate to tighten policy further, we will not hesitate to do so," he said.

He added that officials were aware of the need not to overtighten, which many fear could tip the world's top economy into recession.

The Fed decision last week to hold rates came as they acknowledged soaring Treasuries -- 10-year yields hit a 16-year high recently -- were acting as a substitute for rate hikes.

"I don't believe what Powell said was a shock but I do feel the general consensus amongst investors is that interest rates are at or close to their peaks, and their focus is turning to the timing of rate cuts," said Walid Koudmani, chief market analust at XTB online trading.

"The fact the Fed has sent a clear signal that the conversation for rate cuts is far too premature, this has given some investors a bit of a reality check today," Koudmani said.

US government bond yields rose on Thursday but traders said it may have been linked to a ransomware attack on the US arm of China's largest bank, the ICBC, which disrupted the US Treasury market.

"Some commentators argue that that, rather than weak demand, was behind the relatively poor US government bond auction (that took place Thursday," said Richard Flax, chief investment officer at Moneyfarm.

The yield on the 10-year Treasury note eased on Friday.

- Key figures around 1345 GMT -

New York - Dow: UP 0.3 percent at 33,998.98 points

London - FTSE 100: DOWN 1.4 percent at 7,352.21

Paris - CAC 40: DOWN 0.9 percent at 7,050.64

Frankfurt - DAX: DOWN 0.7 percent at 15,242.63

EURO STOXX 50: DOWN 0.7 percent at 4,199.35

Tokyo - Nikkei 225: DOWN 0.2 percent at 32,568.11 (close)

Hong Kong - Hang Seng Index: DOWN 1.8 percent at 17,203.26 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,038.97 (close)

Euro/dollar: UP at $1.0676 from $1.0671 on Thursday

Pound/dollar: DOWN at $1.2212 from $1.2223

Dollar/yen: UP at 151.45 yen from 151.35 yen

Euro/pound: UP at 87.46 pence from 87.28 pence

Brent North Sea crude: UP 1.3 percent at $81.05 per barrel

West Texas Intermediate: UP 1.3 percent at $76.75 per barrel

J.V.Jacinto--PC