LONDON, July 29 (Reuters) - A fall in bank stocks, caused by speculation about a capital hike at Barclays, weighed on European equities on Monday, causing an earlier rise on the markets to fizzle out.
The pan-European FTSEurofirst 300 index provisionally closed flat at 1,205.18 points while the euro zone's blue-chip Euro STOXX 50 index slipped 0.1 percent to 2,738.22 points.
The STOXX 600 European Banking Index fell 0.8 percent, making it the worst-performing European equity sector, as British lender Barclays declined by 4 percent to take the most points off the FTSEurofirst 300 index.
Barclays was hit by expectations that it might have to embark upon a 4 billion pound rights issue in order to meet tougher UK rules on capital requirements.
"The banks can't really leverage their balance sheets as much as they used to," said Spreadex trader David White. "They've had a good run and many people are using this as an excuse to book profits on them."
Investors were also awaiting the outcome of a U.S. Federal Reserve meeting this week after equity markets fell off record highs hit in May due to expectations that the Fed will eventually scale back stimulus measures that had driven much of the equity rally.