Chemicals stocks recovered slightly on Thursday as shares in Europe rallied after heavy losses the previous day.

The UK's FTSE index had risen 1.54% by 07:28 GMT after plunging 5.18% on Wednesday.

Germany's DAX index was up 1.17% after closing down 5.88%, while the French CAC index was 1.81% higher after a 6.31% loss the previous day.

German chemicals major BASF's shares were up just 0.76% at €29.01 at 07:34 GMT after slumping 9.35% on Wednesday, while German chemicals and drugs firm Bayer was up 1.01% at €46.81 after dropping 7.68%.

Shares in French specialties firm Rhodia, which fell 9.43% on Wednesday, rose 3.59% to €8.94 at 07:23 GMT, while Lanxess was up 3.59% at €15.76 at 07:39 GMT after an 8% drop the previous day.

Wacker Chemie's shares, which suffered a 20% slump in Monday's crash and continued their decline with a 14.2% drop on Wednesday, recovered some losses with a 5.3% rise in early trading to €76.72.

The Bank of England and European Central Bank (ECB) cut interest rates by half a percentage point in an attempt to curb the escalating global financial crisis.

Central banks in the US, China, Canada, Sweden and Switzerland also cut rates as markets in Asia and Europe continued to plummet amid fears of a global recession.

Asian central banks followed moves by their Western counterparts, with China cutting rates by 27 basis points, South Korea by 25 basis points, Taiwan by 25 basis points and Hong Kong by 150 basis points.

In the US the Dow Jones Industrial Average index shed a further 2% to 9,258.10 on Wednesday, while current trading in Asian bourses was volatile.($1 = €0.73)