• Story Highlights
• European shares down after gains following U.S. Fed rate cut
  
• Shares in key UK bank down sharply
  
• Asian markets finish in positive territory
  

(CNN) -- Renewed concerns gripped global markets Wednesday, as European indexes dipped and shares in UK banks tumbled a day after a U.S. Federal Reserve rate cut led to a rally on Wall Street.

Britain's biggest mortgage lender Halifax Bank of Scotland saw shares dive nearly 20 percent at one point as the bank robustly denied rumors of liquidity problems that revived fears over the impact of the global credit crunch.

Early gains, mirroring a bounce in Asian markets, were swiftly lost as the market fell flat, leaving London's FTSE 100 index 45.2 points down at 5560.6 as retailers warned of tough conditions.

The downturn, which also saw Royal Bank of Scotland fall by more than 5 percent, seemed to be focused on the UK, with shares in other European banks flat or on the rise.

Sentiment over the Fed cut had initially been buoyed by better-than-expected earnings from leading U.S. investment banks Goldman Sachs and Lehman Brothers, easing concerns over the about the effects of the global credit crunch.

In Asia, Japan's benchmark Nikkei 225 index closed 2.5 percent higher at 12,260. Hong Kong's Hang Seng index was up 2.4 percent at 21,895. Australia's main index was up 3.7 percent and markets in South Korea, China and Singapore were also sharply higher.

But positive reaction to the three quarter percent reduction to a key short-term lending rate -- the sixth in six months -- was seen by some analysts as unlikely to prevent further dollar weakening or recession onset.

On Tuesday, following the Fed's decision to slash its overnight bank lending rate -- which affects how much interest consumers pay on credit cards and secured loans -- to 2.25 percent, the Dow closed 420 points up at 12,393.

Interest rate cuts are usually viewed as beneficial for the economy since they typically lead to more lending.

Earlier in the week, markets lurched downwards, shocked by the news that JP Morgan Chase had bought rival investment bank Bear Stearns for $2 per share, or less than $250 million.

CNN International's Financial Editor Todd Benjamin said such obvious danger signs that the credit crunch sparked by U.S. sub-prime mortgage crisis should not be ignored regardless of the Fed's move. http://i.l.cnn.net/cnn/.element/img/2.0/mosaic/tabs/video.gifmarkets mixed on fed action" />Watch Todd talk about latest market developments. »

"The bottom line is the markets ignored the continued bad news coming out of the U.S. economy Monday including the latest number on building permits hitting a 16-year low," he wrote in his daily blog.

He added: "Confidence is key, and at this point it's still in short supply."

Other newspapers warned that investors should read long-term signs rather than focus on the Fed's quick fixes.

"Survivor's euphoria may only be short lived," said one Financial Times headline. Another in the paper said: "Analysts say upsurge could be short lived."

In the U.S., which was Wednesday marking the five year anniversary of its invasion of Iraq, a CNN/Opinion Research Corporation poll said 71 percent said U.S. spending in Iraq is a reason for the nation's poor economy.