San Francisco Frontiers - European stocks rebound as Credit Suisse grabs lifeline, ECB meets

Frankfurt, London and Paris won modest gains, a day after plunging about 3.5 percent over fears about the health of Credit Suisse and the wider banking system following the implosions of two US lenders.

The euro advanced against the dollar ahead of the ECB's rate decision due Thursday.

Oil prices dipped slightly after plunging to their lowest levels in 15 months on Wednesday.

"One minute the market is worried about a banking crisis, the next minute it is more relaxed," noted Russ Mould, investment director at stockbroker AJ Bell.

"The next test for the markets will be the ECB's interest rate decision... It seems unthinkable that it would go for an aggressive 50-basis point hike given the nervousness around the banking system."

The ECB call is the first by a major central bank since markets were rocked by banking crisis fears, testing the eurozone institution's resolve to implement another hefty rate hike.

Investors say the ECB should reconsider its plans following the collapse of Silicon Valley Bank (SVB) and Signature, the sector's biggest failures since the 2008 global financial crisis.

There is much debate also over whether the US central bank will continue with its rate tightening campaign as the collapse of SVB has been widely linked to the sharp rise in borrowing costs over the past year.

Some commentators expect officials to lift rates once more next week but possibly hold afterwards, while there is a growing belief that it could even announce cuts before the end of the year.

The market rout has forced Credit Suisse to tap on a financial lifeline from the Swiss central bank.

After seeing its stocks in freefall Wednesday, Switzerland's second biggest bank, already battling multiple scandals, sought to stave off the latest crisis by announcing it would borrow up to $53.7 billion from the country's central bank.

Its shares soared more than 30 percent at the open Thursday.

"Fear has once again gripped the markets, concerned about a repeat of past crises... and the implications for the financial system and global economy," said Craig Erlam, senior analyst at OANDA trading group.

"Of course, this is natural when so little is known about the situation and what it ultimately means for the health of the rest of the system."

- Key figures around 1130 GMT -

London - FTSE 100: UP 0.7 percent at 7,395.95 points

Frankfurt - DAX: UP 0.3 percent at 14,775.50

Paris - CAC 40: UP 0.5 percent at 6,922.92

EURO STOXX 50: UP 0.4 percent at 4,049.54

Tokyo - Nikkei 225: DOWN 0.8 percent at 27,010.61 (close)

Hong Kong - Hang Seng Index: DOWN 1.7 percent at 19,203.91 (close)

Shanghai - Composite: DOWN 1.1 percent at 3,226.89 (close)

New York - Dow: DOWN 0.9 percent at 31,874.57 (close)

Euro/dollar: UP at $1.0611 from $1.0578

Pound/dollar: DOWN at $1.2039 from $1.2055

Euro/pound: UP at 88.13 pence from 87.71 pence

Dollar/yen: DOWN at 132.74 yen from 133.45 yen

West Texas Intermediate: DOWN 0.2 percent at $67.46 per barrel

Brent North Sea crude: DOWN 0.1 percent at $73.62 per barrel

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H.Davis--SFF