Paris - As investors began having second thoughts, the Organization for Economic Cooperation and Development (OECD) on Tuesday praised the United States' plan to rescue its badly ailing financial industry.

"We welcome and support the adoption of the systemic rescue plan announced by the US government ..., which will contribute to re-establish the normal operation of financial markets and preserve employment and economic activity," OECD head Angel Gurria said in a statement released in Paris.

"By putting an end to the deleveraging of financial institutions - which was occurring at alarming speed through capital losses and credit contraction - the systemic rescue plan contributes to stabilize the US and world economies," the statement said.

However, following the euphoric recovery of world stock markets on Friday, after announcement of the bailout, investors were beginning to have doubts about the efficacy of the plan.

Taking their cue from Wall Street's decline on Monday, European bourses retreated in morning trade on Monday, with Paris's benchmark CAC 40 off by 1.44 per cent at mid-morning, at 4,162.50.

London's FTSE 100 was down 1.58 per cent, at 5,153.78, while the DAX in Frankfurt had lost a more modest 0.52 per cent, to 6,075.82. (dpa)