Several of Spain's 18 savings banks, including some that have been involved in recent mergers, have failed tests to see how they would cope with worsened economic conditions, a newspaper reported on Friday.
Separately, Manfred Weber, the head of the Association of German Banks, told local radio that he was confident that German banks all in all would perform well at the tests.
The tests on 91 European lenders, which use scenarios including declines in the value of sovereign debt they hold, are due at 1600 GMT (12 noon EDT).
The euro slipped 0.2 percent against the dollar to a session low around $1.2860 after the Spanish news, just off its levels in late U.S. trade.
European stocks are likely to open lower after rallying in the previous session, with futures on the STOXX Europe 50, Germany's DAX and France's CAC trading down 0.1-0.3 percent.
The rally we've seen in the banking sector yesterday signaled that the stress test results have been well anticipated, thanks to all the comments already made by officials said IG Markets analyst Philippe De Vandiere.
But I think that even if the tests are good, investors will take it as an opportunity to book profits after the strong run-up to the tests.
The tests had been expected to show that some of the unlisted savings banks would need a capital injection under certain scenarios, El Pais newspaper said citing financial sources.
It said a small group of savings banks would need more capital if economic conditions were to worsen sharply and there were sovereign debt crises in several countries.
Amongst these, some have already received funds from the Spanish State's Fund for Orderly Bank Restructuring (FROB), it said, without providing further details. It did not name the banks.
Goldman Sachs said its survey of investors showed they expected 10 out of the 91 assessed banks to fail, giving a pass rate of 89 percent.
The poll of 376 respondents, including hedge funds and long-only investors, also showed European banks were expected to raise over 37.6 billion euros in capital after the tests.
European bank regulators toughened the test criteria for Greek banks on Thursday, just 24 hours before a deadline to release their results, Greek banking sources said.
It was not immediately clear how the stricter criteria would affect the six Greek banks being tested as part of a wider exercise to determine how major European lenders would cope with another economic downturn and a possible debt blow-out.
(Writing by Elizabeth O'Leary and Kazunori Takada; Editing by Tomasz Janowski)