Global stock markets headed in different directions Tuesday, but Wall Street recouped early losses after Federal Reserve chief Jerome Powell tamped down inflation worries.

US shares tumbled early but largely recovered by the close after Powell's comments, although the tech-rich Nasdaq closed lower.

London's benchmark FTSE 100 stocks index added 0.2 percent but Frankfurt's DAX 30 gave up 0.7 percent, after most Asian markets posted gains.

Markets have become jittery about the prospects that the pandemic recovery will ignite inflation and lead to rising lending rates, especially in the US economy, where Congress is moving forward on a $1.9 billion stimulus plan.

"Investors are quickly rediscovering that not all stocks are created equal in a Covid recovery, as expensive tech names (are sold) to provide the source of funds for less expensive travel-related markers, along with energy and other inflation beneficiaries," Axi strategist Stephen Innes noted.

But Art Hogan of National Securities said markets reacted to signals that the economy is poised to rebound, and may take time to notice that "faster economic growth is likely to drive better earnings."

Powell appeared Tuesday in the first of two days of testimony before Congress -- a twice-yearly event -- and said that while inflation could become "volatile" this year as spending recovers from the pandemic collapse, those price increases are unlikely to be large or persistent.

While pledging to keep the benchmark lending rate low until inflation remains above the 2.0 percent target for some time, he stressed that the Fed is prepared to handle whatever comes its way, so "if it does turn out that unwanted inflation pressures arising are persistent and we have the tools to deal with that."

He noted that US inflation averaged less than two percent inflation over the last 25 years.

In the eurozone, inflation rose 0.9 percent in January compared with a 0.3 percent drop in December, official data showed, adding to concerns that price increases are picking up momentum.

On foreign exchange markets, the pound traded near a three-year high against the dollar, a day after British Prime Minister Boris Johnson unfolded a roadmap out of the UK's coronavirus lockdown from March.

But British unemployment is now near a five-year high at 5.1 percent, and could surge further after the government ends the furlough support scheme keeping millions of workers in jobs during the lockdown.

Bitcoin stumbled in its record-breaking run, falling nearly 13 percent to around $48,300 after US Treasury Secretary Janet Yellen on Monday pilloried the virtual currency as an inefficient means of payment that consumed a vast amount of energy per transaction.

Oil prices bobbed up and down but retreated sharply late in the day.

Jerome Powell's congressional testimony will be closely followed for an idead of the Federal Reserve's view on rising Treasury yields Jerome Powell's congressional testimony will be closely followed for an idead of the Federal Reserve's view on rising Treasury yields Photo: POOL / JIM LO SCALZO

New York - Dow: UP less than 0.1 percent to 31,537.35 points (close)

New York - S&P 500: UP 0.1 percent to 3,881.37 (close)

New York - Nasdaq: DOWN 0.5 percent at 13,465.2 (close)

EURO STOXX 50: DOWN 0.3 percent at 3,689.10

London - FTSE 100: UP 0.2 percent at 6,625.94 (close)

Frankfurt - DAX 30: DOWN 0.6 percent at 13,864,81 (close)

Paris - CAC 40: UP 0.2 percent at 5,779.84 (close)

Hong Kong - Hang Seng: UP 1.0 percent at 30,632.64 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,636.36 (close)

Tokyo - Nikkei 225: Closed for a holiday

Euro/dollar: DOWN at $1.2147 from $1.2161 at 2145 GMT

Pound/dollar: UP at $1.4106 from $1.4064

Euro/pound: DOWN at 86.08 pence from 86.44 pence

Dollar/yen: UP at 105.19 yen from 105.07 yen

Brent North Sea crude: DOWN 0.3 percent at $65.06 per barrel

West Texas Intermediate: DOWN 0.8 percent at $61.15