European bourses rallied Thursday afternoon, having tumbled to a three-year low, rescued by dollar-positive news that helped take the pressure off oil prices.

Traders were in skittish mood ahead of crucial US jobs data and the post-interest rate decision statement from European Central Bank president Jean-Claude Trichet. This led to volatile market activity during morning trade, in which oil rose to a record above $146 a barrel, the dollar came close its record low against the euro and equity markets tumbled in response.