European stock markets struggled to hold onto gains Friday, as investors fished for bargains after a steep slump on Thursday that was driven by the Federal Reserve's plans to cut easy-money stimulus, dealers said.
In midday trading London's benchmark FTSE 100 was up over one percent, with the Paris CAC and Frankfurt's DAX 30 also showing significant gains.
But most of the gains had fizzled by the time Wall Street reopened, with Frankfurt's DAX 30 showing a loss of 0.12 percent to 7,918.72 points in late afternoon trade.
The FTSE 100 index was still up 0.40 percent to 6,184.01 points, and the CAC 40 showing a gain of just 0.03 percent to 3,700.02.
"After the declines seen in the past two days we've seen an attempt at a relief rally today, though it hasn't been enough to prevent the fifth weekly decline in a row for European equity markets," said CMC Markets UK analyst Michael Hewson.
All three main European indices had tumbled on Thursday by around 3.0 percent after the Fed signalled it may begin winding down its massive bond-buying policy, which is more commonly known as quantitative easing (QE).
The European single currency slid to $1.3162, from $1.3225 late in New York on Thursday.
In commodity markets, gold climbed to $1,290.50 an ounce in London, after slumping in Asian trading hours to $1,269.45 -- which was the lowest level since mid-September 2010.
"Gold prices tumbled... with no large physical buyers or investors in sight," said Andrey Kryuchenkov, analyst at Russian financial group VTB Capital.
The precious metal had been hit by a rising dollar, making dollar-priced gold more expensive for buyers using rival currencies, thereby weighing on demand.
Gold fell also on receding inflationary concerns. Investors often buy gold as a hedge against inflation, and many analysts see QE stimulus as stoking inflationary pressures.
Investor sentiment has additionally been rocked this week by poor Chinese economic manufacturing data.
The losses are part of a global correction in equities and commodities, which had enjoyed strong rallies since the Fed unveiled its bond-buying scheme in September.
Tokyo began the day two percent lower, extending Thursday's slump, but it reversed course in the afternoon thanks to the dollar rally and closed 1.66 percent higher.
Hong Kong lost 0.10 percent and Shanghai was off 0.16 percent. Chinese shares pared earlier losses after reports the country's central bank had pumped billions of dollars into several lenders to ease a liquidity crisis.
Wall Street also seemed to have finally stabilised, opening Friday with small gains after two days of heavy losses.
Five minutes into trade, the Dow Jones Industrial Average rose 0.56 percent to 14,840.35 points, the broad-based S&P 500 gained 0.60 percent to 1,597.75 points, and the tech-rich Nasdaq Composite Index increased 0.22 percent to 3,372.08 points.
On Thursday the Dow lost nearly 354 points, or 2.3 percent, to finish at 14,758.32 points, to chalk up the blue chip index's largest points loss since November 9, 2011.
The plunge followed one percent losses on Wednesday sparked by Chairman Ben Bernanke's statement that the Fed could begin pulling back its $85 billion-a-month stimulus program late this year and wind it up by mid-2014.
"Optimism was dealt a severe blow as investors continued to grapple with the announcement that stimulus measures from the US could end in the middle of 2014," added Spreadex trader Shavaz Dhalla.
"Investors seemed to be astonished by the announcement despite the fact that officials have been alluding to the possibility in recent times."