NORTH-EAST mortgage lender Northern Rock eased market concerns yesterday that the credit crisis could force it to issue a fresh profits warning.

Shares fell by more than ten per cent as investors considered the impact of the turbulence on Northern, which relies heavily on wholesale credit markets to fund its mortgage lending. The conditions led to speculation that the group would find it harder to find cash.

But a spokesman for the company said: "We have continued to fund during these difficult conditions, which are now easing, because of our strong, diversified global funding franchise, with four main sources, raising a balanced mix of funds from both wholesale and retail markets."

The Newcastle-based group has seen its shares fall by 23 per cent since warning in June that it would not meet annual profits growth expectations and cut its forecasts by two per cent.

Credit Suisse said yesterday there was a chance Northern Rock would "further downgrade full-year guidance soon".

Most of the group's funding comes from borrowing from other banks at the London interbank offered rate (LIBOR) or by securitising existing mortgages and selling them on.

The recent turmoil in credit markets has seen LIBOR jump far higher than the Bank of England's base rate on which mortgages are based.