The bailed-out Tuscan lender plans to raise up to 2.5 billion euros (1.96 billion pounds) in a share sale to fill a capital shortfall unveiled by a health check of banks in the euro zone, and to repay state aid. It will be the fourth time it has raised cash from investors since 2008.

Following the banking check-up, Monte Paschi is expected to book around 3 billion euros in gross loan writedowns in the last quarter, much higher than the 1.2 billion euro total booked over the previous three quarters.

Shares in Monte Paschi have lost roughly half their value since the outcome of the pan-European review of banks was unveiled at the end of October.

By 1105 GMT shares were down 6 percent to 0.468 euros. The current market value of around 2.6 billion euros roughly matches the size of the planned cash call.

Monte Paschi had no immediate comment on the share price drop which traders in Milan attributed to the prospects of the cash call and loan writedowns.

The bank tapped the market as recently as June raising 5 billion euro in a share sale.

The review overseen by the European Central Bank has showed Monte Paschi to be the weakest large bank in Europe with a capital hole of 2.1 billion euros that needs to be filled within nine months.

Monte Paschi Chairman Alessandro Profumo told an Austrian newspaper at the weekend that the bank expects to complete its planned capital increase by July.

(Reporting by Valentina Za, Elisa Anzolin and Stefano Bernabei; editing by Keith Weir)