LONDON, Jan 7 (Reuters) - European financial markets recovered some ground after China said it would suspend its new stock market circuit breaker mechanism as of Friday.
The pan-European FTSEurofirst 300 index moved up off its earlier session lows. The index had at one stage been down by 3.6 percent, but then recovered slightly to stand 2.5 percent lower by 1505 GMT.
German bonds -- a safe haven in times of stress -- sold off with yields on the 10-year hitting a day's high of 0.54 percent having earlier been at a one-month low of 0.48 percent.
"The scrapping of the circuit breaker has given a little bump to risk appetite," said Owen Callan, senior analyst at Cantor Fitzgerald.
"It had become a bit of a self-fulfilling prophecy and people had started to worry it was exacerbating the falls in Chinese stocks." (Reporting by Danilo Masoni and Sudip Kar-Gupta; Editing by John Geddie)