Paris  - Buoyed by Wall Street's strong rebound, French shares on Wednesday continued to make up losses from earlier in the week as rumours swirled that a large French bank was in trouble.

The Paris Bourse's blue-chip CAC 40 was up 0.58 per cent, at 4,055.47, in mid-morning trade, with advancing issues outpacing losers by about three to one.

The French-Belgian bank Dexia, which is to receive an injection of 6.4 billion euros (9.05 billion dollars) from the French, Belgian and Luxembourg governments, led the gainers, up 6.3 per cent to 7.99 euros.

Other financial stocks were faring less well, with insurance giant Axa and the banks BNP Paribas and Societe Generale all on the losing side of the ledger.

The French financial sector was shaken Wednesday by a report in the weekly Le Canard Enchaine claiming that the French banking group Caisses was in need of recapitalization.

Citing an internal report prepared by an unnamed manager, the newspaper reported that because of losses incurred by its real estate subsidiary Nexity and its investment bank Natixis, the group needed 6.5 billion euros by the end of the year to "bring its capital to the legal minimum."

A spokesman for the bank "categorically" denied the report. (dpa)