* STOXX up 0.3 pct, gains 6 pct in two weeks
* Actelion hits fresh all-time highs on Sanofi takeover talk
* Oil stocks hit highest level since June 2015
* Banks pull back after recent rally
(Adds detail and updates prices at close)
By Kit Rees and Danilo Masoni
LONDON, Dec 16 European shares marked a second
week of gains on Friday with merger and acquisition speculation
around drug maker Actelion and a rally among oil stocks helping
the region's benchmark index stay near 11-month highs.
The pan-European STOXX 600 index moved in and out
of positive territory to close 0.3 percent higher.
The index has gained 6 percent in the past two weeks,
boosted by a rally in battered banking stocks on expectations
that rising bond yields would ease margin pressure and helped
further by the strengthening of the dollar.
Actelion soared 10.5 percent to hit fresh record
highs, making it the biggest gainer on the STOXX.
People close to the matter, cited by Bloomberg, said its
French rival Sanofi was discussing a price of about
$275 per share to take over the Swiss drugmaker in a deal that
could come as soon as next week.
Continued talk about a potential deal also raised hopes of
further consolidation in an industry that faces pricing pressure
in the U.S. and whose share price valuations look expensive when
compared to cyclical sectors such as banks.
"This deal also underlines the strong M&A activity in this
sector, which can also be expected to continue in the medium
term," BayerLB analyst Miraji Othman said in a note.
Generali rose as much as 5.2 percent with traders
citing fresh media talk about a possible bid from Germany's
Allianz for the Italian insurer's French business.
Generali's shares fell back to close 1.6 percent higher
after three people close to the situation said that it did not
intend to sell its French business.
Oil stocks were the biggest sectoral gainers, up 1.5
percent hitting their highest level since June 2015 after the
underlying oil price was boosted by signs of producers adhering
to a global deal to reduce output.
Banks were on the back foot, down 0.3 percent, after
hitting their highest since January on Thursday.
Monte dei Paschi di Siena rose 1.3 percent. The
troubled Italian lender opened its offer for a debt to equity
conversion to retail investors, a major part of a
privately-funded rescue of the troubled bank.
Should the plan fail, the Italian government is ready to
step in with state money to keep the bank in business, though
that would require private investors to share in losses.
Other big movers included OCI, which jumped 8.7
percent after broker Kepler Cheuvreux started its coverage of
the stock with a "buy" rating.
Online takeaway company Just Eat fell 4.7 percent,
leading fallers on the STOXX after BAML downgraded it to
(Reporting by Danilo Masoni and Kit Rees; Editing by Elaine