(ANSA) - Rome, July 25 - Financial markets were a bit wobbly Wednesday but regained some of the ground lost the day before on optimistic news from the European Central Bank. After suffering some of the heaviest losses in the region on Tuesday, the Milan stock exchange's benchmark FTSE Mib index regained almost 1.2% to close Wednesday at 12,506 points while the FTSE All Share gained 0.83% to reach 13,538 points. Investors were heartened by suggestions that the ECB may decide to give some extra strength to the region's bailout fund, as policy makers struggle to contain the debt crisis. ECB council member Ewald Nowotny, in an interview with Bloomberg, said that there are arguments in favour of giving the European Stability Mechanism a banking license. That would give it access to ECB lending, easing concerns that the fund might not be big enough on its own to cope with Europe's debt crisis. By early afternoon, the spread between Italy's 10-year bonds and the German Bund had tightened to 510 basis points and the yield relaxed to 6.44%. However, the bond market retreated later in the day and the BTP-Bund spread widened again to 522 basis points and a yield of 6.47%. Still, it was an improvement over Tuesday's trading when the Italian-Germany spread jumped to 537 points - a level not seen since last November, when Italy's ex-premier Silvio Berlusconi was driven from office. Investors were so spooked on Tuesday that the Milan index hit a euro-era low amid concerns Spain might need a bailout and closed the day 2.71% lower. Meanwhile Wednesday, Paris's CAC closed up slightly, gaining 0.23% to reach 3081.74 points while the London Stock Exchange was mostly unchanged on the day. The FTSE 100 slipped 0.02% to close at 5,498.32 points. In Frankfurt, the DAX index gained 0.25% to reach 6,406.52 points while even Madrid's IBEX index rose 0.81% to close trading at 6,004.3 points.