Talks between UK government, banks ongoing: source

LONDON (Reuters) - The British government will discuss the structure of a possible bank recapitalization scheme with the country's lenders over the next few days, having held initial talks on the matter on Monday night, an industry source said.

The source told Reuters the talks will focus on what form of equity the government would receive in return for providing banks with any injection of taxpayer's money.

"That's what they will be working on over the next couple of days," the source said.

UK banking shares were sharply lower on Tuesday on renewed speculation that the government may take stakes in the main lenders, diluting existing shareholders, in an effort to bolster their finances in the face of the global credit crunch.

(Reporting by Myles Neligan)