European equities rebound

Europe's main stock markets rebounded Wednesday from the previous day's losses, but spiking geopolitical tensions continued to dominate investor sentiment.

The region's equities had fallen Tuesday with airlines and hotel groups hit by a US travel warning and the downing of a Russian jet by Turkey.

Asian markets retreated Wednesday, also mirroring a sell-off in tourism-linked firms in the United States overnight.

The incident also sent oil prices up on concern about supplies in the crude-rich Middle East region.

"European equities are positive this morning, having fully rebounded from their geopolitical tension-fuelled lows of yesterday after Turkey shot down a Russian military jet on the Turko-Syrian border, heightening worries about the region even further," said Accendo Markets analyst Mike van Dulken.

At about 1130 GMT, London's benchmark FTSE 100 index added 0.9 pecent, boosted ahead of a British government budget update.

In the eurozone, Frankfurt's DAX 30 won 1.4 percent, the Paris CAC 40 index was also up 1.4 percent compared with Tuesday's close, while Milan gained 1.1 percent.

In foreign exchange activity, the euro nudged down to $1.0604.

European markets rose "after the escalation of tensions between Russia and Turkey proved short-lived", noted Rebecca O'Keeffe, head of investment at stockbroker Interactive Investor.

Turkish President Recep Tayyip Erdogan sought to play down tensions with Russia Wednesday after Turkey's downing of a Russian warplane on the Syria border sparked fears among NATO allies of a wider conflict.

Moscow said Russian and Syrian special forces had rescued one of the pilots who ejected from the plane after being shot down early Tuesday but confirmed another was dead, in an incident that threatens to damage relations between two rival players in the Syrian conflict.

Russian President Vladimir Putin reacted furiously to what he described as a "stab in the back committed by accomplices of terrorists", recommending that Russians do not visit Turkey, a key tourist destination.

Turkey said the Russian Su-24 warplane had violated its airspace 10 times within a five-minute period, but Russia insisted it had never strayed from Syrian territory.

- Delight for homebuilders -

British homebuilders topped the FTSE 100 risers' board.

The sector won a major boost as finance minister George Osborne prepared to unveil a scheme to build 400,000 new homes deemed by the government to be affordable.

The plan will form part of Osborne's latest autumn statement, or budget update, which will be delivered before parliament at 1230 GMT.

Ahead of the update, homebuilders Taylor Wimpey and Persimmon surged by more than six percent in value.

Meanwhile, the Russia-Turkey incident has ratcheted up tensions between the rival players in the Syrian war, and with NATO backing its member Turkey there are fears the crisis could escalate beyond the Middle East.

?A spreading and escalation in recent terror attacks and now the downing of a Russian warplane by Turkey are raising concerns of the possible unforeseen spillover impacts of Middle East conflicts,? Con Williams, a rural economist at ANZ Bank New Zealand, said in a note to clients.

?The accumulation of these events is now beginning to have an influence on global markets,? he added, according to Bloomberg News.

Worries about global security and its effect on the economy were already playing on dealers' minds following the Paris attacks this month and the bombing of a Russian passenger plane in Egypt.

On Monday Washington issued a world travel alert, warning Americans of "increased terrorist threats".

Key figures around 1130 GMT

London - FTSE 100: UP 0.9 percent at 6,336.6 points

Frankfurt - DAX 30: UP 1.4 percent at 11,091

Paris - CAC 40: UP 1.4 percent at 4,888.9

EURO STOXX 50: UP 1.2 percent at 3,264

Tokyo - Nikkei 225: DOWN 0.4 percent at 19,847.58 (close)

Euro/dollar: DOWN to $1.0604 from $1.0642 in late US trade on Tuesday

Dollar/yen: UP to 122.64 yen from 122.55 yen