LONDON, Jan 22: European stock markets went on a roller-coaster ride on Tuesday, but mostly recovered at the end of a day that saw the US central bank make an unprecedented cut in interest rates.

Dealers said investors hardly seemed to know which lead to follow as the markets yo-yoed throughout the day, posting heavy losses in early trade only to recover, fall short again and then end the day mostly higher.

London’s FTSE 100 index of leading shares closed 2.90 per cent higher at 5,740.10 points and the Paris CAC 40 index closed 2.07 per cent higher at 4,842.54 points.

But the Frankfurt DAX ended the day 0.31 per cent lower at 6,769.47 points.

The Euro Stoxx 50 index of leading eurozone shares rose 1.37 per cent to reach 3,753

The turmoil on the European markets came as the US Federal Reserve slashed interest rates by an unprecedented three quarters of a point to 3.5 per cent to try to prevent the US economy falling into recession.

But it failed to stem the stock market turmoil that entered a new phase on Monday when the floodgates gave way amid worries that a looming US recession could hit the rest of the world.

In New York on Tuesday, US stocks plunged at the open in a near panic, with the Dow Jones Industrial Average tumbling below 12,000 points with a loss of 3.48 per cent.

But by early afternoon, the Dow Jones had clawed back some of its losses, showing a drop of 1.19 per cent to 11,955.26 points.—AFP