European stock markets rose Monday, recovering slightly from recent losses as optimism grew over growth prospects, but gains were capped before the European Central Bank\'s update on eurozone bond holdings. Sentiment was boosted after bumper gains in Asia, with Tokyo stocks jumping 1.37 percent as better-than-expected GDP figures that showed Japan is on the road to recovery after a devastating tsunami. In foreign exchange trade, the European single currency gained to $1.4308, compared with $1.4249 late in New York on Friday. The Japanese economy shrank an annualised 1.3 percent in the April-June quarter, official data showed. That was significantly better than market predictions of a 2.7-percent fall. In morning deals, the London stock market gained 0.68 percent, Frankfurt leapt 1.58 percent, Madrid gained 0.38 percent and Paris won 0.98 percent in value. Athens and Milan were closed for public holidays. \"A calmer tone has settled over the markets after last week\'s turmoil,\" said Rabobank analyst Jane Foley. \"Friday\'s better than expected release of US July retail sales data, combined with (the) improved Japanese second-quarter GDP number, has allowed for a collective sigh of relief across the global investment community.\" Wall Street had advanced on Friday, as investors responded to positive US consumer spending data, at the end of one of the most turbulent weeks on record. Europe\'s main markets had also surged on Friday by between 3.0-4.0 percent, as a temporary short-selling ban in parts of Europe helped shares in the under-fire banking sector. France, Italy, Spain and Belgium banned short-selling in bank stocks after rumours about their financial health saw them suffer massive losses in recent days, while Germany upped the ante by calling for a Europe-wide bar. Later on Monday, meanwhile, investors will digest the European Central Bank\'s latest weekly update on its holdings of government bonds of eurozone member nations. \"Today\'s data will give us an indication about how willing the ECB is to directly intervene in the markets and use its financial fire power to back-stop the bond markets,\" said analyst Kathleen Brooks at trading site Forex.com \"With France now coming under pressure it is more crucial than ever for the Bank to act in a more proactive way compared with before.\" The update will reveal the first glimpse of how much debt the ECB has bought since it agreed to increase its bond holdings last week. Dealers understood this to mean that it would purchase more bonds from debt-laden Italy and Spain. \"The amount they bought its likely to be large due to the big movements in Spanish and Italian bond yields last week,\" added Brooks. \"We need to hear that the ECB is willing to expand its balance sheet and continue to buy up these bonds for a sustained period -- otherwise we could see more carnage in the debt markets possibly piling pressure on French yields also.\" Investors are meanwhile eagerly awaiting Tuesday\'s emergency meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel, who will aim to produce joint proposals by September on how to better manage the euro and avoid future instability. Markets have been rocked by concerns that the US and eurozone debt crises may spark a new global recession, as well as unfounded rumours of a France credit rating downgrade and fears over Greek debt exposure. Investors are wondering whether France and Germany -- the eurozone\'s two biggest economies -- can continue to underwrite other states\' debts without losing their top credit ratings and falling victim to the crisis themselves. Italy adopted Friday a 45.5-billion-euro austerity package as its part in the battle to save the single currency. In New York trade on Friday, shares got a boost from positive data showing a 0.5 percent rise in US consumer spending in July over June, which suggested that fears of the economy turning toward recession might be overblown. The Dow Jones Industrial Average closed up 1.13 percent on Friday but suffered a net loss of 1.53 percent in a very volatile week following Washington\'s recent credit downgrade. On Monday in Asia, Tokyo rallied 1.37 percent, Sydney jumped 2.64 percent, Hong Kong rocketed 3.26 percent and Shanghai rallied 1.30 percent. Global shares rose Monday despite World Bank chief Robert Zoellick warning of a \"new danger zone\" ahead for markets, and saying that investors had lost confidence in the economic leadership of several key countries. Zoellick added on Sunday that a convergence of events in the United States and Europe had rattled investors in countries already struggling with sovereign debt issues and high unemployment.