LONDON (AFP) ? European stock markets dived on Monday as the banking sector slumped on concerns over exposure to Greece, after a eurozone meeting failed to resolve the nation's debt crisis, dealers said.
In mid-day trading, London's benchmark FTSE 100 index of top shares slid 0.78 percent to 5,670.57 points, Frankfurt's DAX 30 sank 1.11 percent to 7,084.71 points and in Paris the CAC 40 index shed 1.23 percent 3,776.52.
Milan's MIB index tumbled 2.61 percent to 19,572.42 points after Moody's issued a warning about Italy's credit rating, sparking concern about contagion effects from Greece.
"Uncertainty over the Greece loan decision has seen the FTSE 100 revisit its lows of last week," said IG Index chief market strategist David Jones.
"The banking sector has taken a hammering on the news, with Lloyds among the biggest fallers."
Royal Bank of Scotland shares lost 3.05 percent to stand at 39.06 pence. Rivals Barclays and Lloyds Banking Group saw their share prices tumble by 2.31 percent and 2.81 percent, to stand at 251.25 pence and 47.03 pence respectively.
In France, BNP Paribas shares fell 2.09 percent to 51.11 euros, and Societe Generale lost 2.20 percent to 38.23 euros.
In Germany, Commerzbank sank 1.99 percent to 3.0 euros and Deutsche Bank dropped 1.41 percent to 39.7 euros.
"In signs of stress within the European banking system, some banks have started to reduce the amount of unsecured lending they are prepared to make available to eurozone banks, raising the prospect of a new credit crunch for the European banking system," said CMC Markets analyst Michael Hewson.
After crunch talks aimed at averting Greek default -- and the possible domino effect across their shared currency area -- eurozone finance ministers have told Greece that they and the IMF would release 12 billion euros of loans in "mid-July".
But in return, squabbling Greek lawmakers must endorse stringent austerity measures aimed at reining in profligate state spending, or lose the cash.
Athens has struggled under the weight of huge debts and rocketing bond prices, with ongoing talk of its inability to pay further worsening the situation and sending jitters around the financial world.
In Milan, share prices dived after a timely warning from Moody's over the weekend.
Banking stocks were among the worst affected, with shares in Intesa San Paolo dropping 2.42 percent and UniCredit plunging 2.36 percent.
"Italy's has come under fire over the weekend as Moody's issues a warning that its credit rating could be deteriorating, sparking further fear with investors as worries of contagion spreads across Europe," added sales trader Simon Furlong at Spreadex.
Asian stock markets were mixed on Monday as earlier gains were pared by concerns that Greece's crisis will not likely be resolved in the near future.
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