European traders are anxious about events in the US
European shares have seen mixed trading on Wednesday as US housing and credit woes continue to cast a shadow over global stock markets.
After initially falling 43 points, the UK's FTSE 100 index was up 24 points to 6,126 by early afternoon. Germany's Dax had lost 11 points to 7,419.
The latest share turbulence was caused by Merrill Lynch warning that the credit squeeze will hurt bank profits.
Investor confidence was also hit by weak US consumer sentiment figures.
The Dax was also hit by a fall in German consumer confidence in July, blamed on the turmoil in the markets.
Earlier, Japan's main Nikkei index had closed down 275 points, or 1.7%, at 16,013.
On Tuesday, the US Dow Jones index lost 280 points, or 2.1%, to close at 13,042.
The latest warning about the impact of the problems in the credit market - centred on the crisis in the US sub-prime mortgage sector - was given by brokers at investment bank Merrill Lynch.
undefined It's like walking in the dark because we have yet to get the full picture of the sub-prime loan problems
Analyst Shoji Yoshikoshi
Market jitters and your wallet
They downgraded their opinion of stocks in three firms exposed to the sub-prime sector - Bear Stearns, Lehman Brothers and Citigroup.
The mood of global investors has been further hit by released minutes of the most recent meeting of the Federal Reserve, which suggested a US interest rate cut might not be imminent.
The minutes showed that while the committee's members realised that the problems in the financial markets might need a policy response, they did not act at the start of this month because they were keeping their focus on inflation.
"Everyone is scared," said Shoji Yoshikoshi, senior investment strategist at Mitsubishi Capital UFJ Securities.
"It's like walking in the dark because we have yet to get the full picture of the sub-prime loan problems."
The sub-prime mortgage sector gives higher risk loans to people with poor credit histories.
Sub-prime default levels have risen to record highs in the US over the past year in the face of higher mortgage rates.
This has raised fears that this could hamper credit availability in the broader market, not just in America, but around the world.