London Markets: Bank losses send FTSE 100 dipping into the red

U.K. stocks eased back Thursday, with bank shares declining as the Italian government was reportedly preparing to bail out struggling Banca Monte dei Paschi di Siena SpA.

The FTSE 100 UKX, -0.12%  was down 0.1% at 7,033.75 as financial, consumer goods and basic material shares traded in the red. But oil and gas and industrial shares notched gains. The index on Wednesday shed less than 0.1% to end at 7,041.42.

Bank shares on Thursday were lower as investors waited to hear whether the Italian government will nationalize Banca Monte dei Paschi di Siena BMPS, +2.27% , the world’s oldest lender.

The bank, which is under a heavy debt load, has been trying to raise 5 billion euros ($ 5.22 billion) in new private capital. But those efforts appear to have failed. “It’s only managed [to raise] €2 billion so far, with … key Qatari investors choosing not to invest a €1 billion chunk,” said Connor Campbell, financial analyst at Spreadex, in a note.

“This news has begun to drag on the rest of the European banking sector, with the likes of Deutsche Bank, Barclays and Lloyds all dipping their toes into the red,” he said.

In London, Barclays PLC BARC, -0.92% BCS, +0.18% fell 0.6%, while the Royal Bank Of Scotland Group RBS, -0.31% RBS, +0.36%  and Lloyds Banking Group LLOY, -0.42% LYG, +0.63%   each lost 0.4%. HSBC Holdings PLC HSBA, -0.37% HSBC, -0.12%  was down 0.3%, and Standard Chartered PLC STAN, -1.02% declined 0.7%.

Read: When are European markets closed for Christmas and New Year’s holidays?

The Stoxx Europe 600 Bank Index FX7, -0.25%   shed 0.9%, with Germany’s Deutsche Bank AG DBK, -0.04% DB, -1.58%  off 0.2%. Read:European stocks slip, as Banca Monte dei Paschi stands on the brink

Meanwhile, Banca Monte dei Paschi shares may be in for a volatile session. They fell by more than 6% when they opened after a delay, then swung up by more than 3%. They recently traded up by 1.6%.

Movers: Back on the FTSE 100, advancers were led by a 1.8% rise in testing-services company Intertek Group PLC ITRK, +2.50%  .

At the bottom of the index were shares of miner Antofagasta ANTO, -2.08%  , down 1.7% as copper prices HGH7, -0.92%  slumped nearly 1%.

The pound GBPUSD, -0.1214%  was buying $ 1.2345, down from $ 1.2360 late Wednesday in New York.

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MarketWatch.com – Financial Services Industry News

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