European stocks rebounded on Monday in a choppy day of trading but fears lingered among investors over rising debt levels in Europe that helped trigger sharp falls for equities last week.

London's FTSE 100 index rose in the morning, then fell and later closed 0.62 percent up. Paris rose 0.62 percent and Frankfurt gained 0.93 percent.

David Jones, chief market strategist at financial spread-betting company IG Index, said it had been "another rollercoaster for investors."

"Markets are still jittery," he said.

Wall Street staged a modest recovery in afternoon deals, with the Dow index inching up 0.08 percent and the Nasdaq rising 1.20 percent.

Most Asian indices had ended the day down, however, with Tokyo losing 1.05 percent to close at its lowest level in nearly two months.

On other European stock markets, Zurich rallied 1.32 percent, Madrid jumped 1.02 percent and Milan was up 0.59 percent.

"Sovereign debt concerns continue to be the main weight on investor sentiment," said Michael Bratus at Economy.com, a market analysis website run by international credit ratings agency Moody's.

"The European Union has been unable to convince the public that the problem is under control," he added.

Al Goldman at US investment company Wells Fargo Advisors said: "The overall mood has changed sharply.

"The economy hasn't changed, but a stiff correction does quickly change mood and usually a fair amount of time is required to repair the technical damage.

"The big change is that most stock prices are down and fear is up," he said.

British-Swiss mining giant Xstrata helped boost confidence in London by resuming dividend payments and predicting a new boom in commodities even though the company reported a 41-percent drop in its full-year profits in 2009.

Shares in Xstrata ended the day up 3.56 percent at 983.80 pence.

But British Airways was hit after ratings agency Standard and Poor's downgraded the airline's debt further into junk territory because of its tricky financial situation. BA shares ended the day down 3.68 percent at 199 pence.

Last week the FTSE slumped by almost 2.5 percent on growing concerns that debt-ridden countries Greece, Spain and Portugal may be unable to stabilise their public finances, having spent heavily to combat recession.

"The economic woes in Europe are dominating headlines," said Owen Ireland, an analyst at London-based financial trading broker ODL Securities.

Analysts were unimpressed too with statements about the debt problems from a meeting of the Group of Seven financial powers in Canada.

"The European finance ministers merely confirmed the substance and significance of Greece?s attempts to deal with its deficit on its own without outside interference," said Michael Hewson from spread-better CMC Markets.

The European single currency meanwhile clawed back some ground against the US unit on foreign exchange markets and was changing hands at 1.3705 dollars in London late on Monday compared to 1.3673 dollars in New York late on Friday.

Concerns over Europe's debt woes continued to weigh on most Asian markets earlier in the session, with Tokyo's Nikkei closed down 1.05 percent to 9951.82 points — the first time it had been below 10 000 since December 10.

Japanese auto giant Toyota extended its recent losses as it reels from a series of safety issues. The car maker dropped 1.05 percent to 3280 yen, having plunged from above 4000 yen in just a few weeks.

Hong Kong shed 0.58 percent, while Sydney climbed 0.16 percent.