* Monte Paschi might need 0.5-1.7 bln euros capital-report
* Bank says has no evidence of reported capital gap
* Shares down over 2 pct after initial five pct slump (Adds banker, broker comments, updates shares)
By Stephen Jewkes
MILAN, Oct 20 (Reuters) - Shares in Banca Monte dei Paschi di Siena remained under pressure on Monday on market fears that a European banking review may reveal a fresh capital shortfall at the bailed-out Italian lender.
The bank said that on the basis of documents it had received so far it had no evidence to back up the amounts mentioned in media reports. It said it would issue a statement on results only after the final outcome was made public.
On Saturday leading Italian daily Corriere della Sera reported that Monte dei Paschi could have additional capital requirements of between 500 million and 1.7 billion euros ($640 million-2.2 billion).
The European Central Bank is publish the results of a comprehensive review of the health of Europe’s 130 biggest banks on Sunday, Oct. 26.
“There are concerns about the stress tests,” a Milan trader said, commenting on the latest fall in the bank’s share price.
The health check is supposed to shore up confidence by drawing a line under the euro zone crisis but the possibility that some banks will be told to raise billions of euros in extra capital has put investors on alert, triggering volatility.
Monte dei Paschi, the world’s oldest bank, is seen by many analysts as one of the banks most at risk of failing the test, despite raising 5 billion euros from shareholders in June to strengthen its finances.
“Monte dei Paschi di Siena confirms that the shortfall amounts...reported by the press find no corroboration in the partial and in any case preliminary documents that the bank has so far received,” it said in Monday’s statement.
The statement failed to alleviate the pressure on the stock.
At 1055 GMT shares were down around 2.5 percent at 0.83 euros after trading had earlier been halted for excessive losses of five percent.
Shares hit a record low of 0.7825 euros per share last week on fears the bank may have to raise more capital because of the stress tests.
Most analysts expect a shortfall of between 500 million and 1.0 billion euros. Estimates vary widely and there are some brokers, such as Mediobanca and Equita, who forecast a minimal deficit or none at all.
Equita said in a note on Monday that a shortfall of up to 750 million euros could be covered through asset sales, without resorting to another capital increase.
The bank’s market capitalisation is now 4.4 billion euros, less than the 5 billion euros it raised in the market four months ago.
Monte dei Paschi was bailed out by the government last year after being hit by the euro zone debt crisis and a scandal over loss-making derivative trades. (1 US dollar = 0.7830 euro) (Additional reporting by Andrea Mandala and Valentina Za; editing by Keith Weir)