* FTSEurofirst 300 up 2.1 pct, rebounding from steep losses
* Dexia jumps as governments guarantee borrowing
* Miners rebound as ArcelorMittal reaffirms profit outlook
By Blaise Robinson
PARIS, Oct 9 (Reuters) - European stocks recovered somewhat
on Thursday from steep losses in the previous session after
fresh moves by governments and central banks to ease the
financial crisis.
Dexia <DEXI.BR> jumped 25 percent after France, Belgium and
Luxembourg announced they had agreed to provide state guarantees
for efforts by the troubled financial group to borrow.
At 0811 GMT, the FTSEurofirst 300 <> index of top
European shares was up 2.1 percent at 960.63 points.
Banks were the top gainers, with Royal Bank of Scotland
<RBS.L> up 20 percent, Anglo Irish Bank <ANGL.I> up 29 percent
and UBS <UBSN.VX> up 6.5 percent.
On Wednesday, central banks around the world cut interest
rates in a broadly coordinated policy action, in an attempt to
stem the worst global financial crisis since the 1930s.
"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," said
Rik Zwaneveld, trader at AFS Brokers, in Amsterdam.
"Markets are not turning positive. They are recovering from
heavy losses that we saw earlier this week. The sentiment has
not really improved."
On top of slashing interest rates, the European Central Bank
also halved the premium banks pay for emergency borrowing over
its main refinancing rate.
The ECB said that as of Oct. 9, banks would only pay a 50
basis point premium for using its marginal lending facility,
compared with a 100 basis point premium previously.
The ECB also said it was raising the rate it would pay banks
which deposited excess funds with it overnight, to 50 basis
points below its main rate from 100 basis points below it.
"They're opening the floodgates for liquidity," said David
Schnautz, interest rate strategist at Commerzbank in Frankfurt.
ECB President Jean-Claude Trichet urged market players on
Wednesday to keep their nerve and not to overestimate the risks
of doing business as they had underestimated them in the past.
"It would be a pity (if) the pendulum would go in the other
direction too excessively," Trichet said.
"We have to ask all institutions, all market participants to
keep their composure ... They can count on us to continue to
inspire confidence and take the appropriate decisions."
The interbank cost of borrowing overnight euro and sterling
funds eased on Thursday following the coordinated interest rate
cuts and other steps from authorities the previous day to
unfreeze money markets.
Three-month borrowing on interbank markets remained
expensive across all currencies and actual lending beyond a week
or two remained frozen.
Overnight dollars were also lower on the day at 3.6 percent
but that was still well above the Federal Reserve's new target
rate.
The UK's FTSE 100 index <> was up 2.6 percent,
Germany's DAX index <> up 2.1 percent and France's CAC 40
<> up 2.3 percent.
So far this year, the FTSEurofirst 300 has lost 36 percent,
while the FTSE 100 is down 31 percent, the DAX down 37 percent
and the CAC down 36 percent.
Metal and mining shares rallied, with Antofagasta <ANTO.L>
up 11 percent, Salzgitter <SZGG.DE> up 7.7 percent and Anglo
American <AAL.L> up 8 percent.
ArcelorMittal <MTP.PA>, which reaffirmed its third-quarter
profit outlook, jumped 10 percent.
(Additional reporting by Ian Chua in London; Editing by Paul
Bolding)
