* Bank says it has 60 billion euros short-term dollar funding
* Shares close up 7.2 pct (Adds Wall Street Journal declined to comment)
By Elena Berton
PARIS, Sept 13 BNP Paribas denied it had funding problems, helping shares in France's largest listed bank and its rivals storm back in another roller-coaster session on Tuesday that failed to quiet investors' longer-term worries.
France's largest listed lender, which along with Societe Generale and Credit Agricole has seen its shares hammered in recent weeks on concerns about capital levels and liquidity, said it is funding itself perfectly normally in dollars, both directly and via currency swaps.
Having incurred early losses of up to 10 percent, its shares closed up 7.2 percent. BNP shares had plunged after a Wall Street Journal opinion column cited an executive of the bank as saying it no longer had access to dollar funding.
BNP responded by saying it had 60 billion euros ($81.7 billion) in short-term dollar net funding below one year as of Sept. 9, as well as abundant euro funding and 135 billion euros in assets eligible to central banks.
The bank said it "categorically denied" the anonymously sourced Wall Street Journal column and later said it had asked French market watchdog AMF to open an inquiry into the story. The Wall Street Journal declined to comment.
French banks have been trying to fight back against negative media coverage as their shares have plunged in recent weeks. SocGen has said it is pursuing legal action against UK tabloid the Mail on Sunday over a story last month that alleged the bank was on the verge of collapse.
The denial, along with reports about a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel, and a possible conference call on Wednesday with Greek Prime Minister George Papandreou, ignited shares in SocGen and other banks.
SocGen, which on Monday hit its lowest level since the 2009 recession, led the risers, with shares up 15 percent, while Credit Agricole gained 6.7 percent. The Stoxx 600 bank index closed 3.6 percent higher.
Despite the rebound, investors remain nervous and continue to price in a potential ratings downgrade and French government intervention, said one analyst who spoke on condition of anonymity.
"At these very low prices investors are discounting extreme scenarios," he said.
French bank share prices have rapidly declined since the start of summer, leading to speculation about funding difficulties and French government intervention to recapitalise banks.
One analyst also cited broader worries about the French government's ability to get a handle on its debt burden.
"French banks were still perceived as a safe haven, simply because of the triple A (rating) of France," said Antonio Guglielmi, an analyst at Mediobanca.
"Now that the rating is under scrutiny, the market is realigning the valuation to the rest of the sector." (Reporting By Elena Berton; Additional reporting by Christian Plumb and Jennifer Saba; Editing by Christian Plumb and Mike Nesbit)