(Corrects spelling of portfolio manager in 5th paragraph to Balsotti)
* STOXX down 0.2 pct
* Monte Paschi slumps as cash call starts
* Danone falls after sales growth warning
* Svenska Cellulosa rises after 2.7 bln acquisition
By Danilo Masoni
MILAN, Dec 19 (Reuters) - European shares retreated from 11-month highs on Monday, with Italy's Monte dei Paschi leading banks lower on worries over a cash call, and Danone hit after the world's biggest yoghurt maker warned over sales growth.
The STOXX 600 was down 0.2 percent by 0937 GMT, pulling back after ending at its highest level since Jan. 5 on Friday. Traders said volumes could remain low and trading become choppy as the year-end holiday season approached.
The pan-European index has gained 6 percent in the last two weeks, boosted by a rally in banking stocks on expectations that rising bond yields would ease margin pressure, and helped supported by a stronger dollar.
Banks were the biggest sectoral faller on Monday, as investors took profit from and expressed caution over whether troubled Monte dei Paschi - down 9 percent on Monday - would be able to complete a 5 billion euro capital increase.
"A successful completion of the transaction would be really surprising," JCI Capital portfolio manager Alessandro Balsotti said, adding that the bank may just be trying to gain time for a state aid decree to be finalised.
Monte dei Paschi, which is burdened by a mountain of bad debt, needs to complete the share sale by the end of the year to avoid a state bailout. The bank will offer the new shares between Monday and Thursday.
Italy has said it is ready to step in to rescue the country's third-largest bank should the fundraising plan fail.
Elsewhere in the banking sector, Deutsche Bank fell 2.6 percent, UniCredit was down 1.8 percent and Barclays fell 1.6 percent.
Danone fell around 2 percent. The French food group said it expected its 2016 sales growth slightly below its original targets due to a weaker-than-expected performance at its European dairy business.
"Danone's warning... should not have much impact on EPS (earnings per share) forecasts for 2016 but will undermine confidence in management's ability to deliver," said RBC Capital Markets analyst James Edwardes Jones, keeping an "underperform" rating on the stock.
Among gainers was Swedish hygiene products and forestry group Svenska Cellulosa SCA. Its shares rose more than 3 percent after it announced a 2.7 billion-euro deal to buy German wound care products maker BSN medical.
Reporting by Danilo Masoni; editing by John Stonestreet