FTSE struggles on banking sector losses (AFP)

LONDON (AFP) – Shares in London struggled in early deals on Monday, despite bumper gains in Asia, with banks hit by fears of exposure to the Greek debt crisis after a default warning from Standard & Poor's, dealers said.

Trading was also somewhat subdued amid the Independence Day public holiday in the United States.

In morning deals, the benchmark FTSE 100 index of top shares added 0.06 percent to 5,993.76 points

Asian markets rallied earlier on Monday after better-than-expected US manufacturing data sent Wall Street stocks rallying before the weekend, and on easing fears over the Greek sovereign debt crisis.

Eurozone finance ministers cleared the way on Saturday for Greece to receive the next 12-billion-euro tranche of last year's 110-billion-euro (￡99.2-billion-pound) EU-IMF bailout for Greece after lawmakers in Athens passed tough austerity cuts

The deal led to relief across global markets at the end of last week as many had feared a default could lead to another financial crisis.

But, in a fresh twist, ratings agency Standard & Poor's warned on Monday that debt rollover plans for crisis-hit Greece could amount to a "selective default".

That dented the banking sector, which has been dogged by concern about potential losses linked to Greece.

Lloyds Banking Group (LBG) shares sank 1.77 percent to 49.87 pence, Royal Bank of Scotland fell 1.71 percent to 39.01 pence and Barclays shed 1.62 percent to 261.25 pence.

"Banking stocks are dragging down the major indices as ratings agency Standard & Poor's warned that the French-led Greek rollover plan may trigger a default event," GFT analyst David Morrison told AFP.

"On top of this, volumes will be light thanks to the US Independence Day holiday. Many investors will also be wary of taking on additional equity exposure following last week's rally."