European markets trim losses on Wall Street rally

The FTSE 100 index of leading British shares closed down 43.73 points, or 1.0 percent, at 4,286.93 while Germany's DAX was 59.70 points, or 1.3 percent, lower at 4,696.70. The CAC-40 in France fell only 8.25 points, or 0.3 percent, to 3,225.90.

All three indexes had been 2 to 3 percent lower before Bush revealed that the White House will let automakers draw $13.4 billion in short-term financing, with another $4 billion to be offered later, in return for restructuring proposals by March.

Investors were relieved that the long-running bailout saga surrounding the U.S. auto industry had been resolved, at least in the short-term. The money is only for GM and Chrysler as Ford Motor Co. has indicated that it has enough operating capital for now.

Uncertainty about whether the relief will make a lasting difference pushed the Dow Jones industrial average down 25.88 points, or 0.30 percent, to 8,579.11 while the broader Standard & Poor's 500 index rose 0.29 percent, or 2.60 points, to 887.88. Futures markets had been predicting a lower opening on Wall Street before the Bush announcement.

"The markets have taken it positively because at last it's come," said Howard Wheeldon, senior strategist at BGC Partners.

The decision to help the struggling companies comes after a $14 billion bailout for Detroit automakers failed to get the Senate's approval last week. The companies' cash flows have been dwindling to a slow trickle due to the weak economy and credit crunch.

Analysts said trading on Friday could otherwise be a rocky ride on Wall Street as investors have to negotiate today's triple witching--when stock index futures, stock index options and stock options all expire on the same day. It occurs every three months on the third Friday of March, June, September and December.

"If liquidity was bad before, it now borders on the non-existent, and with no data of note to digest, another rocky ride in low volumes looks to be pre-programmed," said Marc Ostwald, strategist at Monument Securities.

Earlier in the European session, lower energy and commodity prices had been weighing heavily on stocks, particularly in Britain, where the FTSE underperformed the other two main indexes.