LONDON May 30 (Reuters) - European stock markets pared losses after the European Union Commission said the euro zone should move towards the direct recapitalisation of banks from its permanent bailout fund, while the euro jumped on the back of the comments.
It also said the region should move towards a banking union and consider euro bonds as it laid out year-long recommendations.
The FTSEurofirst 300 index of top European shares pared losses. At 1104 GMT, the index was down 0.7 percent at 984.32 points after falling to a low of 976.25 earlier in the session. Euro zone banks recovered to turn flat, while the FTSE 100 also pared losses.
The euro jumped to as high as $1.24684 from around a 23-month low of $1.24254.
The German Bund future came off record highs but was still up 50 ticks on the day at 144.80 after a disappointing Italian auction.