LONDON, June 7: Europe's main stock markets faltered on Thursday following heavy losses on Wednesday triggered by an increase in eurozone interest rates, dealers said.

The London market was cautious before a separate rate call from the Bank of England which was forecast to freeze borrowing costs at 5.50 per cent.

The British capital's FTSE 100 index of leading shares added 0.32 per cent to 6,543.60 points, Frankfurt's DAX 30 gained just 0.04 per cent to 7,733.38 points, while in Paris the CAC 40 slipped 0.15 per cent to 5,969.08. The euro stood at 1.3504 dollars.

All three main indices had erased roughly 2.0 per cent of their value on Wednesday after the European Central Bank hiked eurozone borrowing costs by a quarter-point to 4.00 per cent.

We're seeing a bit of a rebound from yesterday's sell-off,” said Mike Lenhoff, chief strategist at stockbroker Brewin Dolphin Securities.

He added that there was “genuine concern that global interest rates have not yet peaked.

Investors seize on higher interest rates because they increase companies' loan repayments, thereby increasing their costs, and they cut the amount of spare cash available for consumers to spend.

Wall Street had fallen heavily on Wednesday as fears of higher US interest rates and inflationary pressures sent investors diving for cover.—AFP