LONDON, Jan 28: World stock markets showed signs of steady on Tuesday after recent heavy falls, but worries about the threat to the global economy of a war in Iraq kept tensions running high.

In Europe, markets bounced back in early deals as some intrepid investors fished out bargains left from the storm whipped up on global markets a day earlier by a report by United Nations arms inspectors on their findings in Iraq.

After falling by more than three percent on Monday, the DJ Euro Stoxx 50 index of leading euro-zone shares gained 1.1pc to 2,177.1 points in early deals.

Many Asian share markets also held their ground despite the growing expectations of a war in Iraq.

Analysts in Europe said that stocks markets appeared ripe for a technical bounce, but cast doubt on whether share prices had hit the bottom of the recent slide.

Maybe it’s a bottom short-term but at the moment I don’t give much credence to this rebound, said BNP Paribas strategist David Thwaites.

Confidence is so low, sentiment is very negative — I think this is a bit of a technical bounce, he added.

On the foreign exchange market, the dollar battled back against other leading currencies, pushing the euro down to $1.0795 from 1.0850 on Monday.

A day of dollar relief seems in prospect but geopolitical risk is likely to re-assert itself over the coming days, said analysts at the British bank HBOS.

The recent stock market rout has sent investors fleeing for safer havens such as bonds and gold, though as shares steadied the price of the precious metal eased back slightly to $366.13 here from 368.50 late on Monday.

Oil prices also rebounded slightly after falling the previous session when traders had bet that war in Iraq was not imminent and that UN arms experts would get more time to carry out inspections in Iraq.

Benchmark Brent North Sea crude oil for March delivery rose 39 cents per barrel in out-of-hours electronic trading to $30.25.

Among individual European stock markets, the British FTSE 100 index won back 0.7 per cent to 3,505.0 points, moving away from a seven-year low plumbed the previous session.

The German DAX 30 index added 1.6 per cent to 2,685.5 points and the French CAC 40 index climbed 1.0 per cent to 2,822.4 points.

In Asia, stocks fell 1.0 per cent in Tokyo but gained 0.3 per cent in Hong Kong.

Traders remained nervous about the prospect of fresh losses on world stock markets after the recent plunge which pushed the US Dow Jones industrial average down 1.7 per cent on Monday, when the tech-rich Nasdaq also shed 1.3 per cent.—AFP