European stock markets rebounded on Wednesday following heavy losses the previous day sparked by renewed fears over Spain’s debt woes and weak economic growth around the globe. Investors were tracking Spain and eurozone peer Italy as their borrowing costs neared uncomfortably high levels, but took heart that the European Central Bank appeared ready to take action if needed. London’s benchmark FTSE 100 index added 0.57 per cent to stand at 5,627.71 points in afternoon deals, while Frankfurt’s DAX 30 rose 1.14 per cent to 6,681.43 points and the Paris CAC 40 won 1.35 per cent to 3,261.19. Milan’s FTSE Mib index - which slumped nearly 5.0 per cent on Tuesday - rallied 2.08 per cent to 14,760.00 points and Madrid’s Ibex 35 increased by 1.43 per cent to 7,539.70. Barclays Bourse broker Renaud Murail pointed to a remark by ECB board member Benoit Coeure, who did not rule out additional purchases of sovereign debt by the central bank. “The slightest argument serves as a pretext to provide a bit of support and in that sense, the European Central Bank’s comments were well received,” Murail said. In foreign exchange trade, the European single currency rose to $1.3123 from $1.3080 late in New York on Tuesday. US stocks bounced back on Wednesday from the prior day’s steep losses, lifted by aluminium giant Alcoa’s surprise quarterly profit and Spanish and Italian bond yields coming off highs. The Dow Jones Industrial Average jumped 0.83 per cent to 12,821.25 in the first five minutes of trade. The broader S&P 500 gained 0.95 per cent to 1,371.50, while the tech-heavy Nasdaq climbed 0.86 per cent to 3,017.09. “Eurozone concerns are back in the picture as the focus falls on the Spanish situation and whether it will be the next eurozone country to be bailed out,” said trader Andrew Crook at Sucden Financial Private Clients. Madrid’s 10-year bond yields stood at 5.87 per cent on Wednesday, having spiked to the psychologically significant 6.0-per cent level in earlier trade. Spain is 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 10-year bond yields - the return earned by investors - eased to about 5.51 per cent after rising on Tuesday. However, Rome had to pay much higher rates on Wednesday when it raised 11 billion euros in shorter term debt as investors turned distinctly cautious on the outlook. Investors are worried over the plight of Rome and Madrid because their bond yields are approaching the levels that sparked huge EU-IMF rescues 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,” noted broker Jonathan Bristow at Valbury Capital. Investors have also become worried that the severity of Madrid’s austerity measures could deepen the country’s economic downturn, in turn hitting its ability to repay debts. “The Spanish government appears to be losing its battle to restore credibility on the budget front,” noted Rabobank analyst Jane Foley. She added: “Spain is under heavy pressure to prove that it is committed to reduce its budget deficit to its 3.0-per cent target next year.” Eurozone countries are not supposed to run public deficits that exceed 3.0 per cent of national output. Elsewhere, Asian stock markets mostly fell on Wednesday, with Tokyo sliding 0.83 per cent to log its seventh straight session loss.