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Spain bank recapitalization credit-positive, maybe not enough-Moodys

NEW YORK, Oct 1 (Reuters) - Spanish banks' upcoming recapitalization is credit-positive but it may be insufficient, Moody's Investors Service said on Monday.

The ratings agency said in its Credit Outlook publication that the recapitalization amounts published by Spain are below Moody's estimates of what would be needed for Spanish banks to maintain stability in "adverse and highly adverse scenarios."

"If market participants are skeptical about the stress test, negative sentiment could undercut the government's efforts to fully restore confidence in the solvency of Spanish banks," Moody's said.

(Reporting by Burton Frierson; Additional reporting by Tiziana Barghini; Editing by James Dalgleish)

((Burton.Frierson@thomsonreuters.com)(646-223-6292))

Keywords: SPAIN/MOODYS BANKS