MADRID -- Shares in Bankia SA (BKIA.MC) plummeted Thursday as small investors scrambled to sell their holdings after a local newspaper report stoked fears that customers were withdrawing deposits after the government stepped in to rescue Spain's fourth-largest bank by assets.

Traders said the brokerage of Bankia itself was the biggest seller, having sold 1.5 million shares by midday, more than three times the second-biggest seller. That, said David Gualtieri, a director at Madrid brokerage Intermoney, could be an indication that many of Bankia's own retail clients who bought shares in the bank's initial public offering and kept them under custody with Bankia are now throwing in the towel.

At 1043 GMT, shares in the Spanish ailing lender were down 18% for the day at EUR1.35, having fallen as much as 29% at one point in the session. It was the stock's 10th consecutive day of declines. The selloff also drove losses in the rest of the banking sector. The Spanish benchmark index, which had opened higher, was down 1.7%.

Fueling the decline was a report in El Mundo newspaper that said clients of Bankia have withdrawn more than EUR1 billion in deposits after the troubled Spanish lender was bailed out by the government last week. Bankia declined to comment on the report.

"The reasonable thing to do is to suspend the stock from trading until Bankia's situation has stabilized," Gualtieri said. A spokeswoman for the Spanish stock market regulator said trade halts are only imposed when some market participants have information that others investors don't have access to.

Bankia, which had EUR112 billion in deposits from clients at the end of the first quarter, has suffered big losses related to its huge exposure to Spanish real estate. The government last week took control of 45% of Bankia and is planning to inject billions of euros into the lender in an effort to stabilize it.

- By Christopher Bjork; Dow Jones Newswires; +34913958123; christopher.bjork@dowjones.com