* STOXX down 0.2 percent, stays near to 11 month high
* Monte Paschi tumbles to lowest since listing in 1999
* Spanish lender down sharply after EU court ruling
* M&A activity buoys Actelion, Mediaset, Dormakaba
* Volkswagen rises after new dieselgate settlement
(Live coverage of European markets now available on cpurl://apps.cp./cms/?pageId=livemarkets)
Adds details, updates prices)
By Danilo Masoni
MILAN, Dec 21 European shares inched lower on
Wednesday but stayed close to their highest in over 11 months as
merger and acquisition activity propped up the market, while
Monte dei Paschi slumped to fresh record lows on worries over
The pan-European STOXX index fell 0.2 percent after
ending the previous session at its highest since Jan. 4. The
euro zone blue-chip index < .STOXX50>, which closed in positive
territory for the year on Tuesday, slipped by the same amount.
Monte dei Paschi was suspended for excessive volatility
several times and fell as much as 19 percent to its lowest level
since it listed in 1999.
The ailing Italian lender, which said it could run out of
cash in four months, is seeking to raise 5 billion euros on the
market by the end of the year in a last ditch attempt to avert
Investors are sceptical the bank, the country's third
largest, would succeed in raising the funds on the market but
also expressed doubts over whether the 20 billion euros that the
government seeks to borrow to help the banking sector will be
"Will 20 billion be enough to solve Italy's banking problem?
It's hard to say after so many failures. Certainly state aid ..
would be better than forcing the banking system to patch up the
weaker outliers," Anthilia Capital fund manager Giuseppe Sersale
Italy's bank index was down 0.6 percent.
Spanish lenders also fell sharply with Banco Popular
, down 4.4 percent, leading losses, after the European
Court of Justice overturned a Spanish court ruling that limited
the banks' liabilities for so-called floor clauses in mortgage
contracts. It asked them to repay customers over the whole life
of the loan.
Actelion rose 4.5 after sources told Reuters late
on Tuesday that Sanofi's takeover talks with the Swiss
drugmaker were progressing. Shares in Actelion fell in the
previous session on worries a deal would not materialise soon.
Mediaset rose as much as 8 percent to a 16-month
high as it extended a rally after France's Vivendi said
it raised its stake in the Italian broadcaster to above 25
percent. Its shares pared some gains and were up 1.4 percent.
M&A news also buoyed Switzerland's Dormakaba.
Shares in the security group rose 5.6 percent, leading gainers
on the STOXX after the company agreed to buy mechanical security
businesses from Stanley Black & Decker for $725 million.
Volswagen rose 1.5 percent after agreeing to a
$1 billion settlement to fix or buy back another 80,000
polluting diesel vehicles sold in the U.S..
DZ Bank analyst Michael Punzet welcomed the deal but
affirmed his sell rating as uncertainty remains high.
"Once again VW issued positive headlines but didn't deliver
most of the important details. For example, details on
compensation payments to US customers will be disclosed later,
maybe on Thursday. Therefore the financial impact of the
agreement cannot be finally calculated, he said.
Volswagen shares remain below the price they were before the
so-called "Dieselgate" scandal broke more than a year ago.
(Reporting by Danilo Masoni; Editing by Keith Weir)