Global stock markets diverged Friday before the Christmas break as data showed US inflation cooled last month, raising hopes the Federal Reserve will cut interest rates next year.

Wall Street's main indices edged higher near midday ahead of the three-holiday weekend.

London's FTSE 100 index finished virtually unchanged in a half-day session, despite fears of recession as data showed the UK economy shrank in the third quarter and flatlined in the prior three months.

Paris was also flat while Frankfurt finished 0.1 percent higher.

In the United States, government data showed the Fed's favoured measure of inflation slowed on lower energy prices.

The personal consumption expenditures (PCE) price index rose 2.6 percent from a year ago in November, markedly below October's 2.9 percent figure.

The Fed has held rates at a 22-year high following a series of hikes aimed at taming inflation. The central bank holds a policy meeting next month.

"The key takeaway from the report is that it threads the needle for a Fed aiming to bring down inflation with higher rates, but not tank the economy in the process," said Briefing.com analyst Patrick O'Hare.

Equities have been on an upward trajectory in recent weeks as a string of US figures show inflation coming down and the jobs market softening, while the economy is easing but appears safe from recession.

Markets fizzed higher last week after the US central bank signalled it would at last start cutting interest rates next year, in a major dovish pivot as inflation slows in the world's biggest economy.

In Asia, stock markets diverged after China unveiled fresh plans to restrict online gaming.

The measures would put limits on recharging in-game wallets and abolish features meant to increase gameplay.

The news sent tech giant Tencent plunging more than 15 percent in Hong Kong at one point while rival Netease was briefly down more than 30 percent.

XD Inc sank around 20 percent, while there were also losses for Alibaba and Meituan.

Elsewhere, oil prices were slightly higher on fears over Red Sea supply disruptions following attacks by Yemen's Huthi rebels against ships in the area.

Key figures around 1650 GMT

New York – Dow: UP 0.1 percent at 37,443.18 points

London – FTSE 100: FLAT at 7,697.51 (close)

Paris – CAC 40: FLAT at 7,568.82 (close)

Frankfurt – DAX: UP 0.1 percent at 16,706.18 (close)

EURO STOXX 50: DOWN 0.1 percent at 4,521.47 (close)

Tokyo – Nikkei 225: UP 0.1 percent at 33,169.05 (close)

Hong Kong – Hang Seng Index: DOWN 1.7 percent at 16,340.41 (close)

Shanghai – Composite: DOWN 0.1 percent at 2,914.78 (close)

Euro/dollar: DOWN at $1.1010 from $1.1011 on Thursday

Dollar/yen: UP at 142.58 yen from 142.12 yen

Pound/dollar: UP at $1.2716 from $1.2690

Euro/pound: DOWN at 86.59 pence from 86.77 pence

Brent North Sea crude: UP 0.2 percent at $79.56 per barrel 

West Texas Intermediate: UP 0.3 percent at $74.13 per barrel