Bank stocks fall after Moody's warning

LONDON (Reuters) - Shares in Britain's major banks fell on Tuesday after credit rating agency Moody's warned it could cut the triple A-ratings of the United Kingdom, France and Austria.

Shares in Royal Bank of Scotland, 83 percent owned by the British government after a state bailout during the 2008 credit crisis, were down 1.1 percent in early morning trade.

Lloyds, 40 percent owned by Britain after a similar taxpayer bailout, also fell 1.1 percent while Barclays was down by 1.4 percent.

HSBC shares slipped by 0.4 percent.

Trevor Greetham, asset allocation director at Fidelity Worldwide Investment, felt Britain could still ride out the effects of Europe's sovereign debt crisis.

"In a rather muddled statement, Moody's cites a weaker growth outlook as the prime driver for its decision to put UK on negative credit watch before conceding that the austerity it recommends is itself a cause of economic weakness," said Greetham.

"Free of Europe's fiscal pact and with its own central bank and currency the UK has the policy flexibility to ride out the financial crisis," he added.

(Reporting by Sudip Kar-Gupta; Editing by Myles Neligan)