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* LiveMarkets: cpurl://apps.cp./cms/?pageId=livemarkets
* STOXX down 0.2 percent, weighed down by miners, financials
* Monte Paschi ends at record low on state rescue prospects
* Actelion surges to record on J&J talks
* M&A stories help Inchcape, Ontex
By Danilo Masoni and Alistair Smout
MILAN/LONDON, Dec 22 (Reuters) - European shares fell slightly in thin pre-holiday trade on Thursday, as mining and financial stocks weakened, while the likelihood of a state rescue sent Italian lender Monte dei Paschi to a fresh record low.
The STOXX 600 fell 0.2 percent, falling for a second straight session, but remained close to its highest level since Jan. 4 reached on Tuesday.
Monte Paschi fell 7.5 percent at its lowest closing level since it listed in 1999. Italy's third-largest bank and the world's oldest failed to find an anchor investor for its private rescue plan on Wednesday, making a state rescue look inevitable.
"The various attempts to recapitalise the bank through the private sector have failed and the state is now likely to step in," said Aberdeen Asset Management fund manager Rahul Kalia.
Sources familiar with the matter said the Italian government would meet late Thursday or early Friday to discuss an emergency decree to bail out the bank, which warned this week it could run out of liquidity in four months.
Monte Paschi has been in crisis for years and investors appeared to anticipate a solution, averting risks of contagion across the banking sector. The salvaging of Monte Paschi would be part of a 20 billion euro ($21 billion) safety net set up by the Italian government.
While Monte Paschi has slid, European bank shares overall have rallied strongly over the past two weeks, helped by expectations of easing regulatory pressure and rising bond yields, which help them make more profits.
"European banks remain undervalued and the worst has already been priced in," Enrico Vaccari, fund manager at Italy's Consultinvest, said.
Europe's bank index, which touched its highest in more than 11 months earlier in December, fell 0.6 percent as investors took profits following the recent rally.
Miners were the biggest sectoral fallers, down 1 percent as copper hit a 1-month low. The sector remains up 59 percent for the year, however.
Actelion surged to a new record high after the Swiss drugmaker entered exclusive discussions with prospective bidder Johnson & Johnson, in an about-turn that appeared to sideline rival suitor Sanofi.. Actelion rose 4.1 percent and Sanofi added 1 percent.
M&A stories supported other stocks, with Ontex rising 3.5 percent after confirming discussion of a possible acquisition of Hypermarcas in Brazil, while Inchcape jumped 7.8 percent after buying a distribution business in South America.
But Nokia fell 4.9 percent after it said it had filed a number of lawsuits against Apple for violating technology patents.
Despite Thursday's losses, the STOXX 600 is up more than 5 percent in December, and set for its biggest monthly rise since October 2015. ($1 = 0.9576 euros) (Reporting by Danilo Masoni; Editing by Ruth Pitchford)