European stocks were relatively flat in early trading following the US Senate's decision overnight to back the revised American financial rescue plan.

While the UK's main FTSE 100 index was up three points to 4,963, Germany's Dax was down seven points to 5,800.

Asian stocks had earlier fallen steeply, with Japan's Nikkei down 1.9%, and Hong Kong's Hang Seng losing 1.3%.

Analysts said concerns remained as to whether the House of Representatives would now back the revised US plan.

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The House is now due to vote on the revised proposal on Friday.

Worries persist

Australian shares also declined after the Senate vote - losing 0.9% on Thursday.

Analysts there said they expected global investor scepticism to continue until both the House of Representatives also backs the rescue plan - and it is seen to work.

"There's still a lot of distrust of this bill in the House, so it's hard to know what will happen there," said analyst Katsuhiko Kodama, senior strategist at Toyo Securities.

"If you look at recent indicators for the US and Japan, the economy is clearly bad.

"You can't expect a rebound just on the bill passing the Senate."

'Different world'

Fellow analyst Masamichi Adachi said global financial markets were unlikely to stabilise even if the House does pass the bill on Friday.

"It's a completely different world now," he said.

"All the things US authorities are doing now are simply aimed at preventing a global meltdown.

"They might trigger a short rally in markets but won't offer a fundamental solution."

(BBC)

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