European stocks led by volatile financials recovered from near six-year lows at today's opening.
Sentiment was also helped by a key German sentiment index that suggested the country may escape a recession.
By 8.10 a.m. the FTSE Eurotop 300 index of pan-European blue chips added 1.2 per cent at 780 points while the narrower DJ Euro Stoxx 50 index was 1.2 per cent stronger at 2,179.
Insurers and financials led the charge higher on hopes that the stock market bounce will relieve them of the obligation of selling equities to bolster solvency ratios. Axa added 2 per cent, ING climbed 2.7 per cent, Aegon rose 3 per cent and Fortis added 2.5 per cent.
French utility Suez added 2.5 per cent after French daily newspaper Le Figaroreported it has decided to sell British water-distribution and treatment firm Northumbrian Water as it seeks to shed assets and cut debt by a third.
But investors were also jumpy ahead of US President George W. Bush's State of the Union address tonight. Investors want President Bush to end uncertainty after months of speculation about whether the United States will lead a war on Iraq.
"The threat of war is starting to weigh significantly on consumer and business confidence, which is not good for equities," Mr Gert de Mesure, head of equity strategy at Delta Lloyd Securities in Antwerp.