TORONTO (Reuters) - Canada's stalwart and sturdy banks are set to report another string of strong profits in the second quarter — and that just may be the problem.

With credit losses easing, Canada's biggest lenders are expected to impress again as they unveil results. But as global uncertainty takes a bite out of stock markets, even Canadian banks may find it hard to live up to the hype.

"Expectations have just gotten very, very high for the banks and that's probably the biggest headwind to stocks in the near term," Edward Jones analyst Craig Fehr said, forecasting a third straight quarter of strong bank earnings.

Canada's Big Six banks have mostly exceeded expectations in recent quarters. They have boasted strong returns and a steady stream of small acquisitions, even as international rivals struggle to regroup from the global financial crisis. Signs are good for profit growth in the quarter that ended April 30. Loan losses are ebbing as the economy improves, and segments like wealth management and even trading are stronger or still solid.

But headwinds include the stronger Canadian dollar, which erodes the value of earnings from growing US operations.

The outlook for profits, and investor sentiment, could also take a hit if Europe's debt crisis worsens and pulls down global growth.

Bank of Montreal reports results tomorrow, while Canadian Imperial Bank of Commerce, Royal Bank of Canada, Toronto-Dominion Bank and National Bank of Canada report on Thursday. Bank of Nova Scotia caps the earnings season June 1.

The TSX was closed for trading yesterday for the Victoria Day holiday.