In Paris, the CAC 40 index of top shares rallied 2.96 percent to 3,090.51 points, one day after plunging 5.45 percent.

Elsewhere, London's FTSE 100 jumped 2.2 percent to 5,118.29 points and Frankfurt's DAX 30 leapt 2.81 percent to 5,771.21 points

Madrid meanwhile soared 3.01 percent and Milan 2.79 percent, again after very sharp losses Wednesday on the back of fresh investor nerves about the eurozone debt crisis.

In Paris, Societe Generale's share price jumped 8.9 percent to 24.16 euros, after a brief suspension following losses of up to 20 percent Wednesday, as the French banking giant denied it was facing trouble over its Greek exposure.

Other banks, which also suffered badly on Wednesday, staged similar gains on Thursday.

European debt woes flared up again on Wednesday when rumours circulated that France was in danger of seeing its top-notch credit rating downgraded after last week's historic cut to Washington's rating by Standard and Poor's.

However, the French government categorically denied that it might be the next major country to lose its cherished AAA status and the ratings agencies said they did not plan to downgrade.

Financial markets have suffered dizzying losses in recent days and weeks amid mounting concern that the eurozone debt crisis and weak US economy could help push the world back into recession.

Copyright AFP (Agence France-Presse), 2011