Meanwhile, the dollar continued falling sharply against the yen.
In late afternoon, the dollar bought 128.18 yen, down 4.68 yen from late Tuesday in Tokyo and also below its late overnight level of 130.85 yen in New York. The dollar now has fallen a total of 7.58 yen in two days.
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Initially, the Asian rally gave wing to European shares. But the gains quickly gave way to confused swings between positive and negative territory for Britain, Germany, and France. Analysts say the markets are not convinced that a plan to inject public funds into Japan's insolvent banks will really help the banking sector and Japan's economy, which is the second biggest in the world.
On Wednesday, Japan's ruling Liberal Democratic Party presented legislation to parliament that would inject public funds into solvent banks. The measures are expected to pass with the support of the second-largest opposition party.
Sharon Coombs, European analyst with stockbrokers CIBC Oppenheimer in London, said: "if people felt it was convincing, [stocks] would have gained more" earlier in the session. She also said European stock prices were adrift without much specific news to go on. "At this moment in time, there's not much in the way of company news. This makes the markets more volatile - people don't know how to react," she added.
In Britain, meanwhile, most are waiting on tenterhooks to see if the Bank of England will vote on a rate cut when it concludes a two-day meeting on Thursday. Expectations are running so high that some analysts have been suggesting a 1/4 point has already been priced into the market.
Spain's central bank took the leap on Tuesday, cutting its benchmark interest rate by 0.5 of a percentage point to 3.75 percent. The cut marked the start of the final round of interest rate convergence among the members of the future European single currency, which is launched in January.