European shares pared losses in afternoon trade yesterday as US stock futures rose on news reports that the Federal Reserve was mulling measures to address liquidity shortages after its rate cut left investors cold.

By 1243 GMT the FTSEurofirst 300 index of top European shares was down 0.4 per cent at 1,533.73 points, having recovered from an intra-day low of 1,519.47 points.

US benchmark index futures were up between 0.8 and 0.9 per cent.

In Europe, banks were still the worst performing sector as UBS fell 2.7 per cent, Royal Bank of Scotland fell 2.4 per cent and Societe Generale lost 2.6 per cent.

London's FTSE 100 index was down 0.3 per cent, while Frankfurt's DAX was down by just 0.1 per cent and Paris' CAC 40 was showing a 0.6-per cent fall.

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