Spokesman Alan Robinson said Davies, 57, would have to spend at least another month in hospital, but that doctors were confident that with physiotherapy he would recover.
"He is paralyzed on the right hand side of his body but he retains some feeling and he can still hold a guitar plectrum," Robinson said Monday. "These small things mean a hell of a lot. They're small but very important."
Davies, who founded The Kinks in the early 1960s with his brother Ray, collapsed June 30 while promoting his new solo album, "Bug."
One of the best of the guitar-driven bands of the 1960s "British Invasion," The Kinks had a string of hits including "You Really Got Me," "All Day and All of the Night," "Dedicated Follower of Fashion" and "Lola."
Ray Davies (search), 59, the band's chief singer and songwriter, was shot in the leg in by a thief who snatched his girlfriend's bag as the pair walked in New Orleans on Jan. 4.