UPDATE 1-Greek bank stocks slide again, underperform peers

* Sector down 5.2 pct

* 10-year Greek/German bond yield spread widens 6 bps to 183

(Adds more analyst comment, background)

ATHENS, Nov 26 (Reuters) - Greek bank shares .FTATBNK lost more than 5 percent in morning trade on Thursday, adding to the previous session's losses, with brokers citing profit taking by hedge funds and worries over funding.

"As the macroeconomic reading worsened, hedge funds which had positions in Greek banks since the summer are taking their significant profits," said Vassilis Vlastarakis, an analyst at Beta Securities.

At 0957 GMT the Athens bourse's banking index .FTATBNK was down 5.2 percent to 2,888 points with National Bank (NBGr.AT) sliding 4.6 percent to 20.98 euros and Alpha Bank (ACBr.AT) off 4.45 percent to 9.01 euros.

Banks dropped as much as 7 percent on Wednesday, ending the session with losses of 4.13 percent.

The sell-off was prompted by concerns over funding and a weak economy. The CEO of the country's largest lender National Bank said the concerns were overdone. [ID:nGEE5A01ME]

Greek bank shares have had a strong run this year with the respective index up 67 percent year to date, outperforming the broader market's .ATG 32.8 percent advance.

On Thursday Greek government bonds were underperforming other euro zone debt on the country's fiscal woes. The 10-year Greek/German bond yield spread had widened six basis points to 183 basis points.

"The negative sentiment in the Greek market, weakness in European bourses coupled with concerns that the widening of Greek bond spreads may impact the profitability of Greek banks have formed a mix that is pressuring bank stocks," said analyst Manos Hatzidakis at Pegasus Securities.

The drop in Greek bond prices can affect the valuation of Greek bank bond portfolios as they are marked to market. This could have an impact on their bottom line. Also, higher spreads raise the cost of borrowing for Greek banks. (Reporting by George Georgiopoulos and Lefteris Papadimas; Editing by David Cowell) ((george.georgiopoulos@reuters.com; +30210 3311813; Reuters Messaging:george.georgiopoulos.reuters.com@reuters.net))