LONDON, May 9 (Reuters) - Falls in banks pressured European shares on Monday after Standard & Poor's lowered Greece's credit rating further into junk territory on growing fears that Athens may need to restructure its debt.
S&P's downgraded Greece's long-term credit rating to B from BB-minus as it saw an increased risk that Greece will take steps to restructure private debt, and added that a principle reduction of 50 percent or more on Greek debt may be needed to make it sustainable.
Analysts said attention was turning to other highly indebted peripheral euro zone countries which may struggle to finance their debts. Spain's IBEX 35 and Italy's FTSE MIB shed 1.9 and 1.3 percent respectively, underperforming falls in the wider market.
The pan-European FTSEurofirst 300 index of top shares provisionally closed 0.4 percent lower at 1,140.04 points.
"Generally the growth is insufficient to finance the cost of the burden of the debt for Greece, Ireland and Portugal. If Greece restructures its debt, people will start to ask where next," said Andrea Williams, who manages 1.3 billion pounds in assets for Royal London Asset Management.
Banks were among the heaviest fallers on the back of concerns about potential losses for private bondholders in the event of debt restructuring, with the STOXX Europe 600 banking index down 1.2 percent. (Reporting by Harpreet Bhal)