Europe told the G8 summit it may consider spending public funds to inject capital into banks depending on the outcome of stress tests now under way in the region, Japan's Nikkei business daily reported on Tuesday.

A representative from Europe mentioned the possibility of a capital injection at a luncheon of Group of Eight leaders on Friday last week, the paper said, citing an unnamed source.

The European Union is preparing to stress-test more than 100 of the biggest EU banks in July, representing some 50 percent of each member state's banking balance sheet.

EU finance ministers are due to decide next week how many banks will be tested for their risk resilience, and on what criteria. EU leaders have agreed the results will be made public in an effort to restore market confidence. (Reporting by Leika Kihara; Editing by Chris Gallagher)