By Silvia Aloisi MILAN (Reuters) - Italy's scandal-hit Monte dei Paschi posted its sixth straight quarterly loss in the three months to September, highlighting the challenges the bailed-out Tuscan bank faces to lure private investors and avoid nationalization. Italy's third-largest bank by branches reported a net loss of 518 million euros ($697 million) in the first nine months of the year. The loss for the third quarter was 138 million euros, just below a 143 million euros consensus loss forecast by 11 analysts. Provisions against loan losses totaled 1.5 billion euros, up 18.5 percent from a year earlier, as bad loans rose during Italy's longest recession since World War Two. The Siena-based lender said its net exposure to bad debts stood at 20 billion euros at end September, with all classes of deteriorated credits recording an increase compared to June. Fabrizio Bernardi, banking analyst at broker Fidentiis, said that, at 511 million euros, quarterly loan loss charges were higher than the 472 million euros he had pencilled in. Administrative costs of 716 million euros were also slightly above his forecasts. There were, however, some encouraging signs for the lender, which is at the centre of a judicial probe over its costly 2007 acquisition of smaller rival Antonveneta and risky derivatives trades it made in the deal's aftermath. Net interest income, a measure of how much money a retail bank makes from its core lending business, was up 4 percent quarter-on-quarter, compared with a decline for several top Italian banks which reported results earlier this week. And the bank managed to avoid a massive deposit outflow despite the bad publicity due to the derivatives scandal, which erupted in January. Current accounts fell a moderate 1.2 percent from a year earlier. The Core Tier 1 ratio, including 4.1 billion euros of state aid the bank received earlier this year, edged up to 11.1 percent from 11 percent in June. The bank must carry out a capital increase of 2.5 billion euros by the end of 2014, part of a tough restructuring plan demanded by the European Commission as a condition for approving the bailout. CEO Fabrizio Viola told analysts on a conference call there were three possible windows for the capital hike to be launched - January 2014, June or the end of the year. He acknowledged that time was not on the bank's side. "It's clear that the more time goes by, the more difficult it gets," Viola said. The lender's executives did not answer an analyst question on whether a consortium of banks had already been formed for the cash call. The restructuring plan also includes 8,000 job cuts and the closure of 550 branches. The lender said further details about plan would be presented to the market once it gets the EU's green light. ($1 = 0.7430 euros) (Reporting by Silvia Aloisi; Editing by Elaine Hardcastle and Anthony Barker)