European stocks rebound in early trade; Dexia soars

PARIS, Oct 9 (Reuters) - European stocks rose in early trade on Thursday, recovering from steep losses in the previous session as efforts by governments and central banks to thaw credit markets helped calm jittery investors.

Dexia jumped 20 percent after France, Belgium and Luxembourg announced they had agreed to provide state guarantees for efforts by the troubled financial group to borrow money.

At 0717 GMT, the FTSEurofirst 300 index of top European shares was up 1.45 percent at 954.43 points.

Banks were the top gainers, with Royal Bank of Scotland and Anglo Irish Bank both up 17 percent and UBS up 5 percent.

South Korea and Taiwan followed the U.S. Federal Reserve and central banks from Europe, Canada and China in cutting interest rates on Thursday, in an effort to ease the financial crisis.

"Markets are not turning positive, they are recovering from heavy losses that we saw earlier this week. The sentiment has not really improved," said Rik Zwaneveld, trader at AFS Brokers, in Amsterdam.

"The rate cuts are a good step in the right direction to stop the bleeding, but this won't be enough. European governments have to act swiftly and decisively together."

European shares tumbled to a near 5-year closing low on Wednesday after highly volatile trade, shrugging off the coordinated rate cuts by the central banks as credit market and economic growth worries persisted. (Reporting by Blaise Robinson)