European markets steady after Asia sell-off

(Updated at 10:45am) Stock markets across Europe began picking up the pieces on Tuesday following yet another mass sell-off which was sparked by fresh recessionary fears and saw London's FTSE index close 3.5% down and major indices in Germany, France and Italy fall 5%.

In early trading, the FTSE 100 is 80 points, or 01.5%, higher at 5,181, while Germany's Dax and France's Cac 40 are both 1.3% higher.

It follows heavy falls on Monday as fresh concerns about Europe's debt crisis and evidence of a continent-wide drift towards recession prompted investors to dump equities. In London, banks were particularly hard-hit.

Asian markets followed suit overnight, with Japan's Nikkei 225 index falling 2% and Hong Kong's Hang Seng losing 1.4%. US markets were closed for Labor Day.

Adding to poor investor sentiment on Monday was the publication of the worst service sector data in the UK for a decade. This added to fears about the economic recovery.

Investors flocked away from equities to safe havens, such as gold, in the face of continued concerns over the European debt crisis, the expected impact of new banking proposals, and weak economic growth.

The precious metal climbed over 2%, and is now back above the $1,900 mark at $1,919, although it remains off recent record highs.