New Delhi, Dec. 3 -- State-owned banks came under fresh selling pressure in Wednesday's session, with all 12 constituents slipping sharply as sentiment weakened after the government clarified that it is not considering a proposal to raise the foreign direct investment (FDI) limit in public sector banks.

Indian Bank led the decline, tumbling 6% to Rs.807 apiece, while Punjab National Bank, Bank of India, Canara Bank, Bank of Baroda, Central Bank of India, Union Bank, Punjab & Sind Bank, and UCO Bank were also trading lower, down up to 2%.

Reflecting the broad weakness, the Nifty PSU Bank index fell 3% to an intraday low of 8,264, slipping nearly 5% from its recent high of 8,665.

Earlier in October, reports had emerged suggesting that th...