European stocks rose in early trade on Thursday, reversing all of the previous session's losses, but nagging worries over the euro zone debt crisis after the European Central Bank's 3-year tender were seen capping the rebound ahead of the holiday break.

At 8:07 a.m. (British time), the FTSEurofirst 300 <.FTEU3> index of top European shares was up 0.7 percent at 979.22 points, after losing 0.5 percent on Wednesday.

European banks took up nearly 490 billion euros in three-year loans from the ECB on Wednesday, initially easing credit crunch worries, but investors' relief was quickly eclipsed by doubts the banks would use the funds to buy euro zone peripheral debt and ease the pressure on debt-stricken countries.

The initial feedback from Spanish and Italian banks is that the banks won't play carry trade. They reject the idea of using 3-year LTROs to purchase government bonds, a Paris-based trader said.

BNP Paribas was up 2.6 percent and UniCredit up 1.6 percent.

(Reporting by Blaise Robinson)