European Union bank regulators were expected to reveal on Wednesday how tough their health checks of the region's banks will be, in the hope of restoring confidence to markets worried about ballooning public debt.

The Committee of European Bank Supervisors (CEBS) will outline its methodology for a stress test that simulates the impact of a severe economic shock on about 100 banks in the euro zone and other countries, sources close to the process said.

Markets are so far unconvinced the stress tests, whose results are due to be published on July 23, will be credible.

There is a bit of caution about the stress test, the market is concerned whether it will be stringent enough, said Mohit Kumar, a strategist at Deutsche Bank.

The CEBS was not available for comment.

In a sign of political influence, the sources said there was last-minute haggling among EU states over whether to publish a full list of banks being tested because it was still not finally decided which German banks would take part.

The test is expected to cover banks in the 16-nation euro currency area as well as Britain, Sweden and Denmark.

The European Central Bank (ECB) and the European Commission, the EU's executive body, are pushing governments to take a leap of faith, arguing the test will not convince investors if it is too easy.

Top officials in France, Sweden, Germany, Spain, Austria and Britain have already said they expect their domestic banks to do well in the tests. Dutch Finance Minister Jan Kees de Jager said on Wednesday he was also confident.

The stress test includes scenarios on possible writedowns of euro zone sovereign bond holdings, a politically loaded issue because those assumptions run counter to European policymakers' stance that neither Greece nor others will default.

(Reporting by Huw Jones; Editing by David Holmes)

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