The European markets fell for the second day on Monday, as banking stocks slipped after a prominent analyst predicted more losses in the sector and Rio Tinto led mining stocks lower on media reports that the world's third largest miner is planning for a rights issue.

Crude for May delivery fell $2.18 to $50.33 a barrel on the New York Mercantile Exchange, by the time the European markets closed, ahead of the first quarter reporting season that starts tomorrow.

The FTSEurofirst 300 index of pan-European blue chips closed 0.71% lower at 766.09 points, while the narrower DJ Stoxx 50 index fell 0.75% to 1,881.51 points.

Around Europe, the U.K.'s FTSE 100 index slipped 0.90% to 3,993.54, while France's CAC 40 index dropped 0.98% to 2,929.75 and Germany's DAX index fell 0.80% to 4,349.81.

Banking stocks fell after former Deutsche Bank AG analyst Mike Mayo, who is now at Calyon Securities, said he expects loan losses at banks to continue escalate to a level that exceeds the Great Depression and that government measures to revive lending might not help as much as expected.

BNP Paribas, France's largest bank, slipped 2.5%, while Royal Bank of Scotland, Britain's second largest bank, declined 2.6% and Credit Suisse, Switzerland's second biggest lender, dropped 5.3%.

Rio Tinto tumbled 11.3% after the Sunday Times reported yesterday that the company has drawn up plans for an $8 billion share sale should a planned investment from Aluminum Corp. of China fall through.

BHP Billiton, the world's biggest miner, slipped 3.9%, while Anglo American, the second biggest, fell 2.1% and copper miner Antofagasta declined 2.4%.

Heavily weighted oil stocks edged lower after crude oil prices fell. BP, Europe's biggest oil company, declined 0.9%, while Royal/Dutch Shell, the second biggest, slipped 1.6% and Total, the third biggest, dropped 1.8%.

On the other hand, HSBC, Europe's largest bank, rose 3.7%, helped by a strong response to the company's $18.9 billion rights issue.

Infineon, Europe's second biggest chipmaker, rallied 23% after UBS upgraded the stock to buy from neutral, saying non-dilutive refinancing is looking more likely for the company.

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