(Recasts to add details, company denial, background throughout)
By Guillermo Parra-Bernal and Tatiana Bautzer
SAO PAULO, July 21 (Reuters) - Shares in Brazil's largest listed banks posted their biggest decline in a month on Thursday on concerns about the financial health of Odebrecht SA, the engineering group that is embroiled in a large corruption scandal, despite a denial by the company that it would seek an accommodation with creditors.
In a statement, Odebrecht denied plans to seek an in-court reorganization, as reported by financial blog Brazil Journal earlier on Thursday. Ongoing negotiations with banks as well as efforts to sell assets "continue to be positive," the statement said.
The blog, which did not cite any sources, fanned worries over the outlook for banks, which face a deluge of requests from companies to restructure up from 100 billion reais ($30 billion) in problematic loans. Brazil's banking industry has struggled with a harsh recession and record delinquencies this year.
A stock index grouping banking and financial shares trading in the São Paulo Stock Exchange dropped as much as 2.1 percent on the report. The index recouped part of the losses after Odebrecht denied the report, and was trading down 1.0 percent at 6,095 in late afternoon trading.
With Brazilian bankruptcy filings doubling this year and the economy poised to contract for a second straight year, lenders are giving more repayment time, cutting borrowing costs and extending maturities for small and large corporate borrowers alike. Banks had about 130 billion reais in refinanced and restructured loans on their books last year.
Preferred shares of Itaú Unibanco Holding SA, the nation's largest bank by market value, shed 1.3 percent to 33.96 reais. Those of Banco Bradesco SA fell 0.7 percent, while common shares of state-controlled Banco do Brasil SA dropped 1.7 percent on Thursday.
Odebrecht, which has about 100 billion reais in obligations, borrowed heavily in the past decade as it expanded its business into defense, shipbuilding and biofuels. It currently ranks as Brazil's largest private-sector employer.
Reuters reported in April that Odebrecht entered talks with banks to refinance up to 35 billion reais in loans, following the involvement of Latin America's largest engineering group in a major corruption scandal that curtailed access to funding. While some asset sales have succeeded, others have hit a snag as a result of the scandal.
Lenders may slow the disbursement of a $4.125 billion loan to Peruvian gas pipeline operator Gasoducto Sur Peruano GSP SA until Odebrecht fully exits the project overseeing the construction of the pipelines, three people said.
$1 = 3.2864 Brazilian reais Reporting by Guillermo Parra-Bernal; Editing by Clive McKeef