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LONDON (MarketWatch) -- Goldman Sachs on Wednesday downgraded the European banking sector to neutral from overweight Wednesday, following strong gains for bank stocks in the previous week amid initial optimism over the new bailout package for Greece. "Doubts have started to creep back into the market. In particular, these revolve around the scope for funding the new initiatives, particularly in relation to the upsized role of the European Financial Stability Facility," Goldman said. It added that loan growth in the industry is also likely to remain weak. "Concerns about capital raisings are also likely to stay high for some time despite the relatively benign outcome of the stress tests," the broker said.
