Blend together butter, horseradish, mustard, shallot, and salt and pepper to taste in a bowl with a fork until combined well.
Pat steak dry, season both sides well with salt and pepper, and put on rack of a broiler pan.
Spread top of steak with 1 tablespoon mustard butter, then broil 2 to 3 inches from heat 5 minutes. Turn over and spread other side with 1 tablespoon mustard butter, then broil 4 to 5 minutes more for medium-rare.
Transfer meat to a cutting board and let stand 5 minutes. (Leave broiler on.)
Cut baguette crosswise into 4 equal sections, then halve sections horizontally. Broil bread, cut sides up, about 3 inches from heat, rotating pan once, until golden, 30 seconds to 1 minute.
Holding knife at a 45-degree angle, very thinly slice steak across the grain.
Spread cut sides of bread with mustard butter and mound steak on half of bread. Top with watercress and remaining bread.
