By Madeline Chambers

BERLIN (Reuters) - Germany's Constitutional Court looks likely to reject on Tuesday a historic attempt by the country's 16 federal states to ban the far-right National Democratic Party (NPD), described by the intelligence agency as racist and anti-Semitic, say law experts.

The ruling comes amid fears of rising support for right-wing groups due to dissatisfaction over an influx of migrants. But outlawing a political party is difficult in Germany, in part, due to memories of how dissent was crushed in the Nazi era and Communist East Germany.

The NPD's own statements show its hostility to values enshrined in the constitution, say experts, but the ruling hinges on whether the NPD poses a threat to German democracy.

This is harder to prove, as the party has failed to capitalize on the refugee crisis, which shows its weakness as a political force while the anti-immigrant Alternative for Germany (AfD) has soared to 15 percent in some polls.

"The signs are mounting that the court will not ban the NPD," said Oskar Niedermayer, politics professor at Berlin's Free University.

Germany's domestic intelligence agency says the NPD, established in 1964, has about 5,000 members, in a country of 82 million, and links to some violent neo-Nazis. Several senior NPD figures have been convicted of Holocaust denial or incitement but the party denies any involvement in violence.

The NPD has never won enough support to win seats in the federal parliament and in September lost its last seat in a regional assembly, although it is represented on local councils.

Some experts argue that allowing the fringe NPD to exist would legitimize it and send a signal that its right-wing views are acceptable. Others say a ban could be counterproductive and push its members underground.

The chance discovery of the National Socialist Underground (NSU) in 2011, blamed for killing nine immigrants and a police woman between 2000 and 2007, prompted lawmakers to explore a legal ban. The first public hearing took place in March 2016.

Only two parties have been banned since World War Two - the Socialist Reich Party, a successor to Hitler's Nazis, in 1952, and the Communist Party in 1956 in West Germany.

The Constitutional Court has already thrown out objections put by NPD lawyers that the hearing would include details from state-paid informants - an argument that led to the collapse of a previous attempt to outlaw the party in 2003.

"My legal forecast is: there will not be a ban. My political demand is: no court can get rid of right wing populism or right wing extremism with a ban. We can only do that together," wrote Greens lawmaker Renate Kuenast, a trained lawyer, in Die Zeit.

(Reporting by Madeline Chambers; editing by Erik Kirschbaum and Ralph Boulton)