Financial exchange traded funds were set for a 1% decline Monday in the U.S. as renewed concerns over sovereign debt in Europe roiled markets.

Citigroup (NYSE: C) and Bank of America (NYSE: BAC) were both down more than 1% before the opening bell. Financial Select Sector SPDR Fund (NYSEArca: XLF) fell 1% in premarket trade while Direxion Daily Financial Bear 3x Shares (NYSEArca: FAS), a leveraged ETF that bets against the sector, rose more than 2%.

Financial Select Sector SPDR Fund is down about 1% year to date, while the S&P 500 is up nearly 7%. Bank stocks have been hit by regulatory uncertainty, and Goldman Sachs (NYSE: GS) was under pressure last week following reports the company expects subpoenas from U.S. prosecutors seeking information on its mortgage businesses.

Also, investors are concerned about net interest margins at banks if interest rates don’t rise.

“Long-term rates have declined and market expectations for increases in short term rates have been pushed out,” Deutsche Bank analysts said in a report Friday. Net interest margins may be at risk if rates don’t rise, which would disappoint investors, they said.

Financial Select Sector SPDR Fund

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