European stock markets fell and U.S. stocks were poised to open lower Wednesday on concerns about the financial sector, though Asian investors welcomed a hefty U.S. interest rate cut and a huge Wall Street rally.In Europe, the U.K.'s benchmark FTSE 100 fell 0.7 percent to 5,569.10, while Germany's DAX slipped 0.48 percent to 6,362.64. France's CAC declined 0.84 percent to 4,543.91. "There has to be scope for yet further profit taking as traders incorporate the fact that dollar yields may remain attractive to some," said Claire Collingwood, a trader at CMC Markets in London. "The trigger for this could well be the opening of U.S. markets this afternoon."

Financials fell after France's BNP Paribas said it wouldn't bid for rival Societe General, hit by a trading scandal that cost it more than $7 billion.



In Britain, mortgage lender HBOS tried to fend off talk that it had liquidity problems, but its shares fell 9.6 percent in the wake of a collapse at Bear Stearns Cos. over the weekend.

Telecom stocks came under pressure as well, with mobile phone maker Sony Ericsson warning that falling growth in the market for mid- and high-range handsets would have a negative impact on its sales and profits in the first quarter.

Better-than-expected earnings from major U.S. investment banks Goldman Sachs and Lehman Brothers lifted sentiment in Asia.

Japan's benchmark Nikkei 225 index climbed 2.5 percent to close at 12260.44 after rising more than 3 percent earlier. Hong Kong's Hang Seng index was up 2.4 percent at 21,895.27.

But Toshiba lowered its earnings forecast for this fiscal year Wednesday, blaming the reduction in part on $460 million in costs associated with pulling the plug on its HD DVD next-generation video business.

Toshiba also said it would rack up a $666 million operating loss in its HD DVD business.

"We're just back to where we were at the beginning of the week," said David Cohen, a regional economist with Action Economics in Singapore. "The roller coaster will continue. There's still a lot of uncertainty continuing for the world and U.S. economies."

Tokyo's Nikkei index has tumbled about 20 percent since the start of the year.

The Federal Reserve on Tuesday slashed its key interest rate by three-quarters of a percentage point to 2.25 percent, its lowest since December 2004, sending the Dow Jones industrial average soaring 420 points, or 3.51, to 12,392.66 on Tuesday.

On Wednesday, investors looked to grab some profits and U.S. stocks were poised to open lower.

However, Morgan Stanley posted a quarterly profit that bested the average analyst estimate, and stock market futures pared their losses.

Dow Jones industrial average futures fell 49, or 0.40 percent, to 12,356. Standard & Poor's 500 index futures fell 4.90, or 0.37 percent, to 1,329.10, while Nasdaq 100 index futures fell 6.00, 0.34 percent, to 1,765.00.

On the Chinese mainland, the Shanghai Composite index rebounded after five days of losses, climbing 3.6 percent to 3,799.01. Investors seemed to be unfazed by the central bank's move to increase credit requirements for commercial banks by half a percentage point to a record high 15.5 percent.

The dollar was trading at 99.16 yen in European afternoon trading, down from 99.65 yen in New York overnight. It had fallen below 96 yen on Monday, a 12 1/2-year low.

Japanese financial markets will be closed Thursday for a national holiday.

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