European stocks have steadied in early trade, pausing after the previous day's heavy losses that were sparked by fresh worries over the eurozone debt crisis and the weak global economy.
Investors were watching Spain and Italy closely as their borrowing costs have risen sharply in recent days to uncomfortably high levels, putting even more pressure on their governments.
London's benchmark FTSE 100 index on Wednesday dropped 0.11 per cent to 5,589.52 points and in Paris the CAC 40 fell by 0.10 per cent to 3,214.27 points while Frankfurt's DAX 30 added 0.17 per cent to 6,618.68.
Milan's FTSE Mib index - which slumped nearly 5.0 per cent on Tuesday - was down 0.03 at 14,454.94 points and Madrid's Ibex 35 drifted 0.06 per cent higher to 7,437.70.
In foreign exchange trade, meanwhile, the euro edged up to $US1.3100 from $US1.3080 late in New York on Tuesday.
Spanish 10-year government bond yields were close to 5.9 per cent, having spiked to the key 6.0 per cent level in early trade, flirting with rates which many consider unsustainable for the long term as the country struggles to stabilise its public finances and get its economy back on track.
Italian bond yields - the return earned by investors - were about 5.6 per cent.
Investors are extremely worried over the plight of Rome and Madrid because bond yields are approaching levels that sparked the enormous EU-IMF bailouts for Greece, Ireland and Portugal.
"If Spanish bonds continue to rise we will soon see them reach the level that Greece, Ireland and Portugal needed bailout packages to come back from," said broker Jonathan Bristow at Valbury Capital.
"Today, the Spanish prime minister will address parliament to explain the heaviest budget cuts in over 30 years."
Global stock markets plunged on Tuesday as the eurozone crisis returned with a vengeance, with Spanish bond yields jumping as doubts grew over the debt-laden country's ability to control its finances.
Equities across Europe also tumbled sharply on mounting fears over global growth prospects following weak Chinese trade and US jobs data.
On Tuesday, London stocks plunged 2.24 per cent, as investors returned from their Easter holiday weekend on the first trading day for Europe's leading market since last Thursday.
However, losses were deeper elsewhere. Frankfurt shed 2.49 per cent and Paris sank 3.08 per cent, while Milan slumped 4.98 per cent and Madrid tumbled 2.96 per cent in value.
Asian markets mostly fell further on Wednesday following heavy losses in Europe and overnight on Wall Street.