European stocks came off early lows to finish higher Friday, snapping a losing streak driven by mounting concerns that the bloc\'s political leaders cannot produce a solution to the eurozone debt crisis. Dealers said that after falling, the markets turned firmer mid-afternoon on reports there could be changes to the eurozone\'s planned permanent rescue mechanism, reducing the pressure on banks. The European Stability Mechanism due to start operating in 2013 is supposed to be mainly funded by governments but private sector banks -- already dragged into taking losses on their Greek government bond holdings -- also have a role to play. If that was to be dropped, the banks would benefit and their shares rose on the lead, dealers said. Earlier, dealers said investors appeared to have lost confidence that European leaders can tame the crisis snapping at their heels, with the euro slumping as Italy\'s debt problems came to the fore. News that Rome had to pay record and dangerously high rates to raise fresh funds was unnerving when coupled with a French and German warning that if Italy were to collapse, it would take the euro with it. The debate on what to do next appears to turn now on the European Central Bank\'s role, but at a meeting Thursday it was clear French President Nicolas Sarkozy and German Chancellor Angela Merkel remained as far apart as ever. Merkel insists the ECB should focus on its main task -- combatting inflation -- while Sarkozy wants it to become a lender of last resort, acting as a backstop in the bond markets to help out struggling eurozone member states. Until the issue is resolved, there can be little hope of progress and the markets will most likely slip further, dealers said. In London, the FTSE-100 index of top companies closed up 0.72 percent to 5,164.65 points. In Paris, the CAC-40 rose 1.23 percent to 2,856.97 points and in Frankfurt the DAX 30 put on 1.19 percent to 5,492.87 points, all after substantial early losses. The Milan stock market plunged 1.91 percent after Italy paid record rates to raise 10 billion euros ($13.2 billion) but even it turned round to close up 0.12 percent. The rate on bonds due in six months soared to 6.504 percent and the two-year rate hit 7.814 percent, levels considered dangerously high for the long term given Italy\'s massive 1.9 trillion euros public debt mountain. The European single currency at one stage plunged to $1.3212, its lowest point since October 4, on the Italian lead but later stood at $1.3249, still down from $1.3347 in New York late Thursday. \"As confidence that a solution to this crisis might be forthcoming and that the euro will survive has evaporated, (it is) no surprise that international investors have chosen to ditch the euro in favour of more safe-haven currencies,\" said Howard Wheeldon, strategist at brokers BGC Capital. \"The reality is that as those charged with leading the eurozone out of this crisis appear to have moved further apart, it seems to me that short of a miracle the euro will just keep heading south.\" In New York, shares were narrowly mixed, with the blue-chip Dow Jones Industrial Average up 0.18 percent and the tech-rich Nasdaq down 0.31 percent at around 1700 GMT. Markets remained nervous at the end of a week that saw investors shun a bond sale in Germany, the eurozone\'s paymaster and strongest economy, stoking fears the whole euro project is unravelling. Germany\'s borrowing costs, which rose above those of Britain on Thursday, kept on rising. \"That is an extremely rare phenomenon that has only happened very briefly since the creation of the eurozone and that shows well there are starting to be concerns about Germany,\" said debt strategist Patrick Jacq at BNP Paribas bank. The yield on Germany\'s benchmark 10-year bonds rose to 2.278 percent from 2.191 percent on Thursday, while that on the British equivalent rose even further, to 2.306 from 2.158 percent. IG Index analysts said the \"debt crisis has reached a fork in the road,\" believing only decisive action by the ECB or common eurobonds for pooled debt can save the day. As it will take years to put in place the tighter eurozone regulations to make the currency union work properly, \"there is plenty of market speculation that Merkel will be forced to concede\" on either eurobonds or the ECB. \"Given the intensity of pressure in the eurozone bond market such a bargain could come fairly soon,\" they said, looking ahead to the December 9 EU summit. In Asian trade earlier Friday, Tokyo was flat, Sydney shed 1.48 percent, Hong Kong was down 1.37 percent and Shanghai fell 0.72 percent.