Shares in Italian troubled lender Monte dei Paschi were suspended in on Monday down more than 4 percent while some hedge funds are upping their bets against the bank after revelations it faces heavy losses.

Italy's third-biggest bank is under investigation for an opaque series of derivatives and structured finance contracts between 2007 and 2009 that could cost it 720 million euros (623.4 million pounds).

Shares in the Italian bank are now the most in demand in Italy's FTSE MIB <.FTMIB> blue-chip index for short-selling by hedge funds, with 75 percent of those of its shares available to borrow - the "lending pool" supplied by institutional investors - now out on loan, according to data group Markit.

(Reporting by Francesca Landini, editing by Jennifer Clark)