The assessment came just hours after Britain's banks were urged by the Bank of England to take advantage of any lull in the euro zone's financial turmoil to tap markets for fresh cash to bolster their defences.

With UK banks regarded as relatively well capitalised compared with euro zone rivals, the central bank's warning will increase pressure on others to do more to prepare for hard times, such as curbing pay for staff or dividends for investors.

New global rules mean banks have to hold more capital in reserve to cover loans that could turn bad and in recent years banks have been building capital ahead of the new regime. The aim is to create a bigger safety net to protect taxpayers from having to bail out banks and avoid a repeat of the 2007-09 financial crisis.

The European Banking Authority (EBA) said on Thursday if the rules, known as Basel III, had been in force at the end of December, the biggest 44 EU banks would have needed 157 billion pounds to hold core capital of 7 percent of assets, the target level for banks to meet.

That estimate was 32 billion euros lower than a similar assessment six months earlier, but still showed Europe's banks represented 53 percent of a global shortfall estimate released last week, so they may need to work harder than U.S. or Asian banks to bolster balance sheets.

GETTING THERE EARLY

The tougher rules will be phased in from January. They will not be fully in place until 2019, but investors and regulators want banks to implement them early.

The Basel Committee of global regulators last week estimated the biggest 102 banks globally would have needed 374.1 billion euros at the end of December to reach the required capital level.

The Basel Committee and the EBA are carrying out appraisals every six months and say their estimates are not comparable to industry forecasts because banks should meet much of their needs by retaining profits, shedding loans and changing their business models, as well as taking into account the phased introduction.

The EBA said it would produce a final report on that capital raising exercise on October 3.

The EBA is also striving to improve banks' funding position, as new Basel liquidity rules look likely to also show European banks are in a weaker position than U.S. and Asian rivals.

The liquidity coverage ratio (LCR), a key plank of new international standards, would have left EU banks 1.17 trillion euros short of funding if applied at the end of December, representing 3.7 percent of their assets, the EBA estimated.

The Basel Committee last week estimated global banks would have a funding shortage of 1.8 trillion euros, or 3 percent of assets. Banks have until 2015 to meet the LCR standard.

(Editing by Mark Potter)