6.30pm Markets Update

Updated: Friday 12 February 2016 18.38

European shares rebounded today as Deutsche Bank and Commerzbank rallied, helping stock markets stage a partial recovery from stinging losses earlier in the week.

The pan-European FTSEurofirst 300 index ended 3% higher, rising back up off its lowest level in more than two years.

Fears about how well European banks can cope with slow growth and low interest rates had pushed European banking shares to multi-year lows this week.

But Deutsche Bank surged 11.8% after saying it would buy back more than $5bn in senior debt, easing concerns about its bonds.

Its rival Commerzbank also reported a return to profit in the fourth quarter, and Commerzbank shares jumped 18%.            

The STOXX 600 Europe Banks index rose 5.6%. Germany's DAX advanced 1.84%, although it remains nearly 30% below a record high reached in April 2015.

In Dublin the ISEQ gained 0.95%. AIB (+13.37%) and Bank of Ireland (+2.3%) both performed well.

Elsewhere, the CAC in Paris added 2.52%, while the FTSE in London gained 3.08%

Paras Anand, head of European equities at Fidelity International, said the threat to banks had been exaggerated, as had the general market slump this week.

"We do not have a structurally weak banking sector at the moment," he said. "The current market moves look overdone and we are, for the first time, drawn to some of the harder hit areas."

Others remained more cautious. Credit Suisse's investment committee kept a "neutral" position on global equity markets and said it was still too early to buy back into stocks.

The FTSEurofirst 300 still ended down 4% over the course of the week. It is also down 14% since the start of 2016, amid worries about a slowdown in China, the world's second-biggest economy.

Meanwhile, in the US Wall Street has also rallied, led by a rebound in beaten-down financial and energy stocks after five straight days of a gruelling sell-off on fears over the health of the global economy and the banking sector.

Nine of the 10 major S&P sectors were higher, led by a 3.7% rise in the financial sector. Energy and materials stock s, both of which have been hit by slumping commodities prices, were up about 2.5%.

Banks stocks, which were the worst hit due to concerns about the impact of negative interest rates and an energy-backed loan defaults, were the top gainers, led by JPMorgan's near 8% gain.

Earlier in Asian trade, Tokyo's Nikkei index slumped 761 points (4.8%) to close at 14,953 as a strong yen hammered exporters, ending a tumultuous week on Japanese markets. The Hang Seng index in Hong Kong lost 226 points (1.2%) to finish at 18,320.