LONDON, Sept 18: Europe’s main stock markets experienced mixed fortunes on Tuesday in cautious trade before a US interest rate decision, as the British banking sector rebounded slightly led by troubled Northern Rock.

Investors remain concerned about the fallout from a global credit squeeze after British bank Northern Rock was forced to ask for financial help last week from the Bank of England.

In Europe, London’s FTSE 100 index of leading shares won back 0.30 per cent in value to stand at 6,201.20 points in early afternoon deals.

The Paris CAC 40 added 0.09 per cent to 5,444.20, while Frankfurt’s fell 0.24 per cent to 7,461.93 points.

The DJ Euro Stoxx 50 index edged down 0.01 per cent to 4,184.93 points.

The euro stood at 1.3860 dollars.

Later Tuesday, the US Federal Reserve was forecast to slash borrowing costs from the current level of 5.25 per cent as the central bank seeks to boost the flagging American economy, dealers said.

Investors seize on news of lower interest rates because they reduce loan repayments for businesses and therefore bite less into profits while also boosting consumers’ disposable incomes.

In London on Tuesday, Northern Rock shares rebounded somewhat after the British government vowed to protect customers’ savings at the embattled bank.

The group’s battered share price rose 6.45 per cent to 301 pence after earlier touching as high as 318 pence.

But Northern Rock stock had slumped by about 55 per cent over the course of Friday and Monday -- losing the company more than 1.3 billion pounds in market value, in the face of heavy withdrawals by anxious depositors.

Other British banking stocks recovered ground after big losses the previous day that were linked to the Northern Rock debacle.

British home loan specialist Alliance and Leicester rallied by 21.7 per cent to 730 pence, after diving by more than 30 per cent in value on Monday.

However in Frankfurt, shares in Germany’s Commerzbank fell as much as 2.00 per cent as rumours swirled that it might report higher-than-expected losses linked to the troubled subprime, or high-risk, US real estate market.

Commerbank shares later stood down 0.33 per cent at 26.83 euros.

Wall Street stocks had fallen on Monday as anxiety ran high as analysts speculated as to how far the Fed would cut rates.—AFP