* 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
(Adds detail, updates prices at close)
By Kit Rees and Danilo Masoni
LONDON, 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 0.3 percent.
The ailing Italian bank 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 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 state aid.
However Monte dei Paschi has been unable to find an anchor
investor willing to put money in its privately funded rescue
plan less than 24 hours before the offer ends. That has prompted
speculation that the government could step in this week to bail
Italy's actions over the next 24 hours regarding its banks
will be crucial for the country's credit rating, DBRS' top
sovereign analyst said.
Investors expressed doubts that the 20 billion euros that
the government seeks to borrow to help the banking sector will
"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 up 0.4 percent.
Spanish lenders also fell sharply with Banco Popular
, down 5.8 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 6.4 percent 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
Mediaset rose as much as 8 percent, hitting 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 ended 2.8
M&A news also buoyed Switzerland's Dormakaba.
Shares in the security group rose 6.9 percent, leading gainers
on the STOXX after the company agreed to buy mechanical security
businesses from Stanley Black & Decker for $725 million.
(Reporting by Danilo Masoni and Kit Rees; Editing by Tom