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* STOXX 600 up 1 pct
* Sky rockets after Fox bid
* Italian lenders lead banks lower
(Live coverage of European markets now available on cpurl://apps.cp./cms/?pageId=livemarkets)
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By Kit Rees and Danilo Masoni
LONDON, Dec 9 European shares rallied near
11-month highs on Friday after a strong week, helped by gains
among media companies after a takeover bid ignited Sky's
shares, though Italian banks were under pressure.
The STOXX 600 marked its fifth session of straight
gains up 1 percent, its best week since January 2015.
The standout performer on the pan-European index was
Britain's Sky which soared more than 26 percent after
Twenty-First Century Fox Inc approached the pay-TV
group with a $14.1 billion takeover bid.
Sky's shares posted their biggest-ever one-day gain, and
Europe's Media index jumped 4.5 percent, its best day
since May 2010.
Equities got a boost on Thursday after the European Central
Bank said it would scale back its monthly asset purchases, a
surprise move that lifted euro zone bond yields, which in turn
are seen as helping reduce pressure on bank profits.
However, Europe's basic resources index fell 1
percent and Europe's banking index retreated 0.7 percent
as profit-taking kicked in after the index's best week in five
Italian banks were the biggest laggards, with Monte dei
Paschi's shares plummeting more than 10 percent after
the ECB rejected the bank's request for more time to raise
capital, virtually erasing all gains made this week on bets a
way could be found to rescue the ailing lender, even involving
"A state intervention in Monte Paschi could entail heavy
losses for shareholders but also hurt bondholders. If retail
investors do get hurt too there could be a loss of confidence in
the system and litigation risks would increase," said Angelo
Menzella, portfolio manager and analyst at JCI Capital.
Such expectations helped shrug off concerns over political
instability after Prime Minister Matteo Renzi's resignation on
the back of a resounding defeat on Sunday in a referendum on his
plans for constitutional reform.
Banca Popolare di Milano dropped 4.3 percent, and
Banco Popolare was also down 3.9 percent.
UniCredit fell 2.3 percent. Italy's largest lender
is set to announce next week the country's biggest bank share
issue, which could be worth up to 13 billion euros according to
"In Italy, virtually no bad loans have been written off at
all ... and that is really difficult to get any economic
momentum going when your banking sector is still seized up," Ed
Smith, asset allocation strategist at Rathbones, said.
Elsewhere on the broader market, Amsterdam-based digital
security company Gemalto rose 6.3 percent after
agreeing to buy 3M's identity-management business for $850
Among other strong gainers, cable company Altice
rose 5.3 after saying it was exploring the possibility of
listing a minority stake in its U.S. subsidiary.
Europe's healthcare index rose 3.2 percent, among
the top sectoral gainers, having been out of favour recently on
concerns over pricing pressure in the United States.
(Reporting by Kit Rees and Danilo Masoni, editing by David