16:58: The FTSE closed down 0.28 per cent at 5444.82 after Italian 10-year bond yields retreated to 6.8 per cent.
The German Dax closed up 0.6 per cent while the French Cac 40 closed down 0.34 per cent.
Shroders European economist Azad Zangana says the eurozone is likely to enter a “serious recession” in 2012.
Zangana says: “Many eurozone banks are already on life support – unable to raise funds in capital markets and heavily reliant on liquidity from the European Central Bank. However, this will not be enough to stop banks from deleveraging, and reducing lending to the real economy.
“As a result, we are now forecasting a serious recession in the eurozone in 2012, which is also likely to result in recessions in the wider European region, including the UK.”
14.45: The FTSE 100 is now up by 0.45 per cent to stand at 5482.50. The French Cac 40 and the German Dax are also up 0.8 and 1.4 per cent.
13:57: European markets have recovered from early falls this morning after Italian 10-year bond yields dipped below the 7 per cent level to stand at 6.8 per cent.
The FTSE 100 is now up in trades by 0.45 per cent to stand at 5484.87, while the German Dax and the French Cac 40 are up by 1.3 and 0.7 per cent respectively.
Markets across Europe fell in early trades. The falls were on the back of share drops in both Asia and the US overnight. Italian bond yields rose as high as 7.48 per cent yesterday, raising concerns it would be the next eurozone country in need of a bailout.
13.05: Markets have moved into positive territory after falling sharply in early trades as concerns remain over Italian borrowing costs.
At 13.05, the FTSE 100 was up 0.6 per cent to stand at 5494.36, while the French Cac 40 and the German Dax are up 1.2 and 1.8 per cent respectively.
11.26: The FTSE 100 has fallen by 0.5 per cent as markets remain uncertain over the impact of Italian borrowing costs reaching record euro-era highs.
At 11.26, the blue-chip index stood at 5427.92, while the French Cac 40 was down 0.2 per cent. However, the German Dax has made a slight gain of 0.3 per cent.
10.01: European markets have recovered all of their early losses despite fears that Italian borrowing costs could make it the latest victim of the eurozone crisis.
At 10.01, the FTSE was up slightly by 0.1 per cent to stand at 5464,08, while the French Cac 40 and the German Dax were both up more than 1 per cent. All three markets were all down by more than 1 per cent in early trades.
9.15: Markets have regained some of their early losses but are still down on their opening prices.
At 9.15, the FTSE 100 was down 0.8 per cent to stand at 5418.59 to stand at 5418.59, while the French Cac 40 and the German Dax were down 0.2 and 0.3 per cent respectively.
8:39: European markets continued to fall in early trades at concerns about Italy’s borrowing costs continue to grow.
At 8.39am, the FTSE 100 was down 1.18 per cent to stand at 5395.84. The French Cac 40 and the German Dax were down 1 and 1.4 per cent respectively.
The cost of borrowing on Italian government bonds jumped to 7 per cent on Wednesday. It is feared that this level is considered unsustainable and that Italy may be the next victim of the eurozone debt crisis and may follow the likes of the Ireland, Greece and Portugal in requiring a bailout.
In the US, the Dow Jones closed down 3.2 per cent, while Asian shares fell on Thursday with Japan’s Nikkei index down 2.9 per cent South Korea’s Kospi down 3.8 per cent and Hong Kong’s Hang Seng falling 4.4 per cent.
On Thursday, Italy intends to auction £4.2bn of one-year bonds in a bid to calm market concerns.