European stock markets recovered some of their early losses Thursday after better than expected U.S. retail sales figures for February helped Wall Street open modestly higher. Still, markets were subdued due to more grim jobs news from the world's largest economy and unease ahead of this weekend's G-20 meeting of finance ministers and central bankers. The FTSE 100 index of leading British shares was down only 14.27 points, or 0.4 percent, at 3,679.54, while Germany's DAX was 42.71 points, or 1.1 percent, lower at 3,871.39. The CAC-40 in France fell 46.83 points, or 1.8 percent, at 2,627.37. Earlier in the day, Europe's main markets had been trading even lower. However, a smaller than expected decline in U.S. retail sales during February helped Wall Street rally in early trading, fueling hopes that U.S. stocks may post a third consecutive day of gains. The Dow Jones industrial average was up 18.63 points, or 0.3 percent, at 6,949.03 while the broader Standard&Poor's 500 index rose 3.01 points, or 0.4 percent, to 724.37. The gains on Wall Street were not anticipated as the futures markets were pointing to a fairly big drop at the open. However, the Commerce Department report showing retail sales edged down only 0.1 percent last month — less severe than the 0.5 percent drop expected — and an upward revision to January's rise to a three-year high of 1.8 percent helped generate hopes that consumption in the U.S. may be holding up better than expected despite a big rise in unemployment. "It is still too early to talk about green shoots of recovery in the United States, but perhaps we can start to see the bottom of the cycle," said Richard Snook, senior economist at the Centre for Economic and Business Research in London. Despite the modest rally on Wall Street, there was some tension in the markets ahead of the G-20 meeting of finance ministers and central bankers in southern England, which starts Fridayand could see the world's leading industrial nations divided over how to best get the global economy back on track. On Wednesday, U.S. Treasury Secretary Tim Geithner had called for bigger fiscal stimulus actions around the world and more money to be given to the International Monetary Fund. Geithner's comments came as hopes of a unified plan emerging at the G-20 leaders' meeting were fading fast, due to an apparent split between the U.S. and the 16-nation euro zone over the best way forward. Even though Geithner agreed that the international financial regulatory regime should be a topic of discussion this weekend, his emphasis clearly was on the need for governments around the world to spend their way out of recession. In Europe, many governments are arguing that there is no further need at the present time for additional tax cuts or spending boosts. "There seems little hope, then, that the participants will make progress and the chance is greater that international frictions will break out into the open," said Stephen Lewis, an analyst at Monument Securities in London. "This would add to the sense of despair in financial markets," he warned. Despite the hopes earlier this week that U.S. bank Citigroup may have turned the corner, the mood in the markets remained volatile as the economic and corporate news from all corners of the world continued to disappoint. With China reporting a slump in retail sales growth in February and many companies across Europe, such as Italian luxury goods maker Bulgari SpA, German fertilizer supplier K+S AG and car giant BMW AG, reporting hard times ahead, investors looked to book profits accumulated earlier in the week. Official government figures also confirmed that Japan, the world's second largest economy, saw output contract at its sharpest rate in 35 years in the fourth quarter of 2008. Earlier in Asia, Japan's Nikkei 225 stock average fell 177.87 points, or 2.4 percent, to 7,198.25 but Hong Kong's Hang Seng recovered early losses to gain 0.6 percent to 12,001.53. Earlier in Asia, South Korea's Kospi inched marginally higher but markets in Singapore, Australia, mainland China, Taiwan and elsewhere traded lower. Oil prices recovered somewhat from a steep fall overnight, with benchmark crude for April delivery up $1.26 cents at $43.59 a barrel. On Wednesday, the contract tumbled $3.38, or more than 7 percent, to settle at $42.33. In currencies, the dollar was steady at 97.17 yen while the euro fell 0.5 percent to $1.2772.

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