* Shares drop 4.3 percent in heavy volume
* Commerzbank declines to comment
* Strong sector performance may raise appeal of share sales
(Adds analyst comment, background)
LONDON, Jan 11 Shares in Commerzbank
shed 4.3 percent in heavy volume on Friday, with traders citing
talk of a possible share issue for Germany's second biggest
Commerzbank declined to comment.
Volume in Commerzbank stock was 138 percent of its 90-day
daily average by 1108 GMT, compared with 41 percent traded on
the FTSEurofirst 300.
"There is a lot of appetite for bank shares at the moment,"
Edward Firth, head of European Banks at Macquarie, said.
"So it seems there would be every reason for some of the
weaker ones to take advantage of that ... Commerzbank would seem
to fit that category."
Belgian banking and insurance group KBC sold 1.25
billion euros ($1.65 billion) of new shares to shore up its
capital position last month at a 9.4 percent discount to the
market. KBC shares dropped 7 percent immediately after the
European banks have enjoyed a 47 percent gain since
early June 2012, compared with a 22 percent rise on Europe's
STOXX 600, as confidence in the sector has improved in
the wake of the European Central Bank's pledge to do whatever it
takes to save the euro.
The rights issue speculation also helped to knock the wider
banking sector, which fell 0.2 percent.
Commerzbank, which received an 18 billion-euro government
bailout in the financial crisis, missed third-quarter profit
The bank's core Tier 1 ratio - a measure of a financial
strength - was 12.2 percent at the end of September 2012. The
bank has said it expects a ratio "comfortably above" the 9
percent level this year, thus meeting new bank capital rules,
known as Basel III.
($1 = 0.7568 euros)
(Reporting By David Brett; Additional reporting by Alexander
Huebner in Frankfurt. Editing by Jane Merriman)