European stocks rebound

London's benchmark FTSE 100 index of top companies closed up 0.25 percent to 5,543.95 points, while in Paris the CAC 40 added 0.37 percent to 3,130.17 points and in Frankfurt the DAX 30 climbed 0.66 percent to 6,518 points.

In foreign exchange trade, the European single currency edged up to $1.2959 from $1.2932 late in New York on Wednesday.

"Equity markets have had a more stable foundation today after the decline of recent days as investors await new developments from Europe, particularly in Greece and Spain," said Michael Hewson, a senior market analyst at CMC Markets.

Madrid's IBEX 35 index jumped 3.42 percent to 7,045.7 points, one day after slumping 2.77 percent to its lowest level since 2003.

Dealers said Madrid was boosted after Spanish Prime Minister Mariano Rajoy's government announced on Wednesday that it would partially nationalise the fourth-biggest listed bank, Bankia.

The conservative administration had previously refused to countenance the use of public money to rescue the banks and is due to detail more measures to shore up the sector on Friday.

Shares in Spanish lenders rose on optimism that the government was determined to clean up bank balance sheets, many of them awash with risky loans extended during a property bubble that collapsed in 2008.

Santander, the eurozone's largest bank by capital, climbed 5.02 percent to 4.875 euros while rival BBVA, the number-two bank, advanced 5.11 percent to 5.266 euros.

But Bankia shares tumbled, slumping 3.62 percent to 2.053 euros.

"The U-turn by Rajoy about bailing out the banks increases the likelihood that the Spanish government may be open to further bailouts," noted Hewson.

However, he warned "there are risks, given the deteriorating economy in Spain and (this) could well leave the sovereign vulnerable to a ratings downgrade."

Spanish 10-year bond yields, which recently shot back above the six percent level at which economists say it becomes difficult for governments to borrow sustainably, fell back on Thursday to 5.939 percent from 6.051 percent on Wednesday.

In Athens on Thursday, Greece's socialist leader headed into make-or-break talks in a bid to form a coalition government and stave off repeat elections.

Evangelos Venizelos, who as finance minister supervised debt-ridden Greece's 240 billion euro EU-IMF bailout, is the third leader to attempt to form a government since weekend polls delivered a strong message against austerity.

The European Union is meanwhile sending a strong message that Greece must honour the rescue conditions of budget cuts and deep reforms. In Brussels, an EU official told AFP that Greece would receive a 4.2-billion-euro aid tranche as expected on Thursday, but a further one billion would be held back till Monday.

US stocks were mixed, where a jump in the US trade deficit in March served as another confirmation that the economy had slowed down in the first quarter.

The Dow Jones Industrial Average rose 0.39 percent to 12,885.01 points in midday trading. The broader S&P 500 gained 0.36 percent to 1,359.51 points while the tech-rich Nasdaq slipped 0.13 percent to 2,930.92 points.

Asian markets were mixed in cautious trade.

Tokyo fell 0.39 percent, Hong Kong fell 0.51 percent, Shanghai was flat and Sydney gained 0.48 percent.