Bank shares across Europe rebounded Thursday, recovering some of Wednesday's hefty losses, after fears subsided somewhat over a possible downgrade of France's AAA credit rating and over potential problems at some French banks.

At 0930 GMT, the Stoxx Europe 600 banks index was up 1.9% at 140.69, recouping some of the losses of Wednesday's session but off its intraday high of 143.20.

Banking shares in nearly all countries were higher. In Germany, Deutsche Bank (DB) shares were up or 1%, while Commerzbank AG (CBK.XE) was 3.5%.

Italy's UniCredit (UCG.MI) was up 2.7%, Intesa Sanpaolo rose 2.6%; Spain's Banco Santander (STD) was up 3.4% and Banco Bilbao Vizcaya Argentaria (BBVA) rose 2.8%.

Most French banks were also higher, though still way off the levels before Wednesday's massive selloff started on investor worries over Societe Generale's (GLE.FR) exposure to Greek sovereign debt and talk that European banks holding Greek bonds maturing between 2020 and 2025 might now also be included in a restructuring agreement with the private sector.

SocGen was up 4% and Credit Agricole (ACA.FR) was 5.5% higher. However, BNP Paribas (BNP.FR) was down 0.9%.

SocGen shares had fallen more than 20% at one point Wednesday before recovering to end down 14.7% at EUR22.18.

In interviews late Wednesday and Thursday, Societe Generale Chief Executive Frederic Oudea dismissed rumors of troubles at the bank. SocGen pointed out that its first-half financial results were "solid ... "even while absorbing the plan to help Greece" and said its performance in July and August underscores its capacity to generate solid earnings in the future.

And Credit rating firms Moody's, Standard & Poor's and Fitch reiterated their current triple-A ratings and stable outlooks for France.

Nonetheless, the recovery remains fragile, reflected in the continued rise in the cost of insuring European sovereign debt with credit default swaps.

"The moves show that there's still substantial fear in the market that the sovereign debt crisis could be widening further, and the spread widening is adding further volatility," one bank analyst in Frankfurt said. "However, fundamentally, when looking at individual bank's results, they are relatively good."

CDS are derivatives that function like a default insurance contract for debt. A rise of one basis point in the cost of five-year CDS equates to a $1,000 increase in the annual cost of protecting $10 million of debt for five years.

-By Ulrike Dauer, Dow Jones Newswires; +49 69 29725 500; ulrike.dauer@dowjones.com

(Noemie Bisserbe, Ruth Bender and William Horobin in Paris and Art Patnaude in London contributed to this article.)

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