GLOBAL MARKETS - Stocks reverse into red as bank concerns weigh

By Natsuko Waki

LONDON (Reuters) - European stocks slipped and Wall Street was set for a weaker open on Wednesday as fresh concerns about the health of the banking sector weighed, while oil prices and the euro stepped back from recent record peaks.

The chief executive of German bank HVB, a unit of Italy's UniCredit, said the bank will have significant writedowns in the first quarter given financial market turmoil.

Ambac Financial Group, a bond insurer that struggled to raise capital earlier this year, posted a bigger-than-expected quarterly core loss per share due to its exposure to credit derivatives.

Investors, since the start of the month, have bought into stocks as first-quarter earnings results have so far shown firms are escaping the worst case scenario of plunging profits due to the credit crisis.

However, the financial sector -- the epicentre of the crisis -- is undoubtedly getting hit and an expected slowdown in global growth could weigh on corporate profitability going forward.

"The key issue over the next week is whether analysts reset expectations. As U.S. and UK GDP weakens, investors have still not factored in a slowdown, and they may start doing this," said Justin Urquhart Stewart, investment director at 7 Investment Management.

The FTSEurofirst 300 index were down 0.7 percent while MSCI main world equity index erased gains to stand slightly down on the day. Banking stocks fell more than 2 percent, one of the worst performers in Europe.

U.S. stock futures were down 0.4 percent , indicating a weaker open on Wall Street later. Key U.S. earnings results due later include Boeing and Apple.