LONDON (AFP) - Wall Street shares limped higher in early trade Thursday but markets in Asia and Europe took another punishing hit, with Tokyo suffering its worst loss in two decades, as recession clouds deepened over the global economy. The Dow Jones Industrial Average was up by 0.57 percent shortly after the start of trading in New York. Nearing the close in European deals, London was down 2.21 percent, Frankfurt lost 1.23 percent and Paris shed close to 4.76 percent. Renewed panic had erupted in trading rooms earlier Thursday, with Tokyo closing down more than eleven percent and European indices briefly shedding almost 6.0 percent. Nathan Topper at Economy.com said there were signs of improvements in the credit markets that could eventually ease the financial turmoil, reflected in so-called credit spreads and the Libor interbank lending rate. "Debt markets are showing signs of better health: Treasury yields are up and Libor is down," he said. "Credit spreads need to narrow to avoid a severe global recession." Two key interbank lending rates, Libor and Euribor, eased further on Thursday despite the sharp losses on world stock markets. The lower rates were an indication that banks were becoming less reluctant to lend money among themselves. Bank skittishness over the past few weeks, when lenders were weighed down by soured mortgage-related debt, contributed to an acute credit crisis that threatened the health of the global financial system. On Thursday the three-month London interbank offered rate (Libor) in dollars fell to 4.5025 percent from Wednesday's rate of 4.5500 percent. The three-month Euribor rate, the benchmark in the eurozone, dropped to 5.090 percent from Wednesday's rate of 5.168 percent, reversing much of the surge in the crisis after the collapse of Lehman Brothers bank a month ago. European Union leaders on Thursday handed French President Nicolas Sarkozy a mandate to press for a sweeping overhaul of the global financial system at a crunch weekend summit with George W. Bush. Sarkozy, whose country holds the EU presidency, said there should be no taboos in the talks with his US counterpart at Camp David on Saturday, called in the wake of the global financial crisis, and should address everything from bankers' bonuses to new roles for the IMF. "We do not have the right to miss this opportunity for reconstructing our system of finance in the 21st century," Sarkozy said at the end of a two-day EU summit in Brussels dominated by the financial crisis. Earlier Thursday, Japan's Nikkei ended down 11.4 percent, wiping out most of its gains earlier in the week. It was the index's second-largest percentage loss ever and the steepest fall since a stock market crash in October 1987. "Don't stand in front of the freight train," Sonray Capital Markets chief economist Clifford Bennett warned investors. "This is clearly a panic with further to go. The equity market game has fundamentally changed." Elsewhere, Hong Kong lost 4.8 percent, Seoul sank 9.4 percent, Mumbai shed 2.11 percent and Sydney tumbled 6.7. A global recession was the markets' biggest fear, said CMC Markets head of trading James Foulsham in Australia, describing the day as "another shocker." The Dow sank 7.87 percent Wednesday after a dismal US retail sales report and Federal Reserve chairman Ben Bernanke said a recovery from the financial crisis would not happen right away. Oil prices continued to fall Thursday, with Brent North Sea crude dropping below 68 dollars a barrel for the first time since June 2007. World stock markets have fallen heavily this year as the global credit crisis brought down once-mighty Wall Street giants Bear Stearns and Lehman Brothers and prompted a raft of government bailouts of troubled Western banks. The Dow has so far fallen 35 percent, the Nikkei has lost 45 percent and the London FTSE 100 is down about 37 percent. "The stock market is buried by recession fears," said Al Goldman at Wachovia Securities. US retail sales slumped 1.2 percent in September, a sign of deeper troubles for an economy hit by the squeeze in credit and the worst financial crisis since the Great Depression. San Francisco Federal Reserve president Janet Yellen said the US economy was probably already in recession. Most analysts say a US recession appears virtually certain, as a crippling credit crunch and housing meltdown drags down the rest of the economy despite a 700-billion-dollar banking sector rescue plan. Arab stock markets fell on Thursday for a second day, with Dubai shedding 6.5 percent but up by 0.2 percent on the week.