THE North-East's fragile economy suffered a day of mixed fortunes yesterday.

About 1,500 jobs were saved after engineering company Kvaerner averted a financial crisis at the last minute.

But the good news was tempered by the announcement that at least 70 people were to lose their jobs in the rapidly dwindling textiles industry.

Rainbow Corporatewear, parent group of Baird Clothing, which operates from the Skelton Industrial Estate, east Cleveland, said the jobs - mainly in the manufacturing department - had to go in order to strengthen the company.

The news comes as a blow to the area, which suffers from one of the highest rural unemployment rates in the region.

Councillor David Walsh, leader of Redcar and Cleveland Borough Council, said: "I understand the company's market for high-quality work wear has been affected by a loss of orders following the September 11 disasters.

"Hopefully they can be renewed once the economic climate becomes brighter.

"I will be talking to the chairman of One NorthEast, Dr John Bridges, to stress the need to put more money into the regeneration of east Cleveland."

There was better news for the 1,500 workers employed by Anglo-Norwegian group Kvaerner, including 500 on Teesside.

The firm has been handed a lifeline by Russia's Yukos Oil, a 22 per cent shareholder in the group.

The engineering and construction concern, which employs about 7,000 staff in the UK, has gone from crisis to crisis in recent weeks, seeking solutions to keep it operating, despite heavy debts.

Senior managers and directors met investors, banks and lawyers as well as the Norwegian government over the weekend.

Yukos' has come up with a five-point plan to provide Kvaerner with working capital for the next week, allowing for the completion of negotiations for the restructuring of debt.