Spain's savings banks held talks with hedge funds - report

LONDON (Reuters) - Spain's struggling saving's banks, or cajas, have held talks with major hedge funds and private equity groups to try to raise 15 billion euros ($21 billion) in fresh capital to avoid a bail-out, the Financial Times said on Friday.

U.S. hedge fund Paulson & Co and buy-out groups Cerberus CBS.UL and Apax Partners APAX.UL have held meetings with several cajas to discuss possible investments, the paper said.

The talks by Bankia, Banca Civica and smaller rivals stalled because of the low valuations offered by foreign investors, the FT said, citing unnamed bankers and investors.

Spain's savings banks lent indiscriminately to property developers during a decade-long housing boom that fizzled out three years ago.

Ratings agency Moody's downgraded 30 Spanish banks on Thursday, citing a combination of pressure on the country's sovereign debt and declining market share of smaller banks as the financial sector consolidates. ($1 = 0.707 Euros) (Reporting by Karolina Tagaris; Editing by Matt Driskill)