LONDON — European stock markets recovered some earlier losses Thursday after President-elect Barack Obama made an urgent pitch to Congress to back his plan to resuscitate the U.S. economy, but Wall Street remained under pressure from dismal retailing news.

Though Obama warned that the economic situation would likely get worse before it gets better, he said his plan to cut taxes and pump billions into the U.S. economy would help limit the depth and length of the recession. It was his first appearance directly aimed at taxpayers and the highest-profile pitch for the plan, which is expected to total nearly $800 million.

"The message is just going down well (in the markets)," said Howard Wheeldon, senior strategist at BGC Partners in London.

"There is a belief that there's something about this man and something about this plan," he added.

Those hopes helped European markets erase most of their earlier losses, which had been generated by mounting concerns about global economic growth as leading U.S. retailers revealed poor sales figures.

The FTSE 100 index of leading British shares closed down only 2.14 points lower at 4,505,37 while Germany's DAX was 57.56 points, or 1.2 percent, lower at 4,879.91. The CAC-40 in France was 21.76, or 0.7 percent, down at 3,324.33.

On Wall Street, stocks enjoyed a brief rally following the Obama speech but selling soon resumed amid mounting fears about the current state of the U.S. economy and ahead of crucial jobs news Friday.

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The Dow Jones industrial average was down 95.26 points, or 1.1 percent, at 8,674.44, while the broader Standard & Poor's 500 index was 5.91 points, or 0.7 percent, lower at 900.74.

Nevertheless, stocks remain on the defensive following a healthy rally in the run-up to the 2008 year-end and the early sessions of 2009, as investors grapple with grim economic news.

Bad news was the story of the day earlier Thursday following a raft of dismal trading updates in the U.S. Among the many retailers that reported steep sales declines were Sears Holdings Corp., which operates Kmart and Sears stores, luxury retailer Saks Inc., Gap Inc., Abercrombie & Fitch Co. But the biggest surprise came from Wal-Mart, the world's largest retailer, which posted a smaller sales gain than what Wall Street expected and cut its fourth-quarter earnings outlook.

Earlier, every major market in Asia posted a fall, marking an end to a New Year's rally.

Stock market observers said there's been a noticeable change in market sentiment over the last 24 hours or so as investors took heed of the warnings and the likelihood that Friday's closely-watched U.S. non-farm payrolls data for December may be particularly grim.

Neil Mackinnon, chief economist at ECU Group, said the reaction to Friday's jobs data will be key to see if the markets can kick on again.

"If it's a bad report and equities finish on a positive tone, that will be a very encouraging sign for markets, but if it's really bad and equity markets slump, it will be challenging for markets for the rest of the quarter," he said.

Earlier in Asia Tokyo's Nikkei 225 stock average lost 362.82, or 3.9 percent, to 8,876.42, snapping a seven-day winning streak as the yen traded higher, and Hong Kong's Hang Seng Index fell 571.55 points, or 3.8 percent, to 14,415.91.

South Korea's Kospi shed 1.8 percent, while Australia's benchmark dropped 2.3 percent and Taiwan's key index lost 5.3 percent. India's market, which plunged Wednesday after the chairman of major outsourcing company Satyam Computer admitted doctoring the firm's accounts for several years, was closed for a holiday.

Light, sweet crude for February delivery fell $1.63 cents to $41.00 a barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $5.95 overnight to settle at $42.63.

In currencies, the dollar weakened 1.7 percent to 91.05 yen, while the euro traded 0.7 percent higher at $1.3726.

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AP Retail Writer Anne d'Innocenzio in New York, Associated Press Writer Steven R. Hurst in Washington and AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.