European markets recover lost ground

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By Pan Pylas ASSOCIATED PRESS

UPDATED:

LONDON (AP) – European markets shed some early gains Thursday ahead of Wall Street's opening, but remained in positive territory, with British banking stocks in particular enjoying a strong rally in the wake of the government's 500 billion pound (US$865 billion) rescue plan.

European jitters appear to have been calmed by Wednesday's simultaneous interest rate cuts from the world's key central banks, even though lending between financial institutions remains limited, and despite mounting speculation that the U.S. may copy the British plan to buy stakes in banks to restore confidence in the battered U.S. financial system.

"Equities appear to offer value at current levels, they are clearly oversold in the short-term and policy-makers are, somewhat belatedly, taking action to support the system and the economy," said Tony Dolphin, director of economics and asset allocation at Henderson Global Investors.

By early-afternoon London time, Germany's DAX was 76.14 points, or 1.5 percent, higher at 5,,077.30, while France's CAC-40 was up 88.63 points, or 2.5 percent, at 3,585.52. The FTSE 100 index of leading British shares was 59.59, or 1.4 percent, higher at 4,426.28.

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All three indexes had been around 3 percent higher earlier in the session, but some profit-taking ahead of the bell in New York appeared to prompt the modest retreat.