March 6, 2017 / 10:46 AM / 6 months ago

European shares weighed down by Deutsche Bank but M&A gives support

* STOXX 600 down 0.4 pct, stays close to 15-month peak

* Deutsche Bank leads banks lower on rights issue plans

* French carmaker PSA climbs after deal to buy GM's Opel

* Standard Life, Aberdeen rally after setting tie-up terms

* Miners lead sectoral fallers as metal prices slip (Adds details, updates prices)

By Danilo Masoni

MILAN, March 6 (Reuters) - European shares pulled back on Monday with banking stocks led lower by a slump in Deutsche Bank shares after the German heavyweight lender unveiled an 8 billion-euro cash call as part of a major reorganisation.

Losses, however, were limited by fresh deal-making activity in the auto and asset management sectors, which helped the STOXX 600 fall just 0.4 percent and stay half a percentage point below the 15-month peak hit last week.

Deutsche Bank fell 6 percent, making the stock the biggest drag to the pan-European index and pulling the European banking index down 0.8 percent.

Deutsche Bank, which also announced an overhaul of its business structure and plans to list its asset management arm to help raise extra cash, will start the rights issue in two weeks.

In spite of Monday's losses, shares in the German lender are up more than 4 percent this year, having outperformed the recent global bank rally after settling in December a major legal case with the U.S. over the sale of toxic mortgage securities.

JPMorgan hailed the new strategic direction taken by the bank as steps "in the right direction" but kept its neutral rating on the stock, saying more details on the financial impact of the planned measures were needed.

PSA Group rose more than 2 percent after the French carmaker agreed to buy Opel from General Motors in a 2.2 billion-euro deal that is expected to generate cost savings of 1.7 billion euros.

The deal will create a regional giant to challenge market leader Volkswagen, which fell 0.2 percent, while Fiat Chrysler, which was recently supported by fresh talk it may join the sector's consolidation, added 0.6 percent.

Merger activity also buoyed asset managers after Aberdeen and Standard Life set terms of their planned 11 billion pounds all-share tie-up that could pressure rivals to follow suit as industry margins sag.

Aberdeen and Standard Life rose 4.7 and 5.8 percent respectively.

"We see a strong industrial logic for the merger in terms of scale, capabilities and cost savings," said Ben Cohen, analyst at Canaccord Genuity.

"There must also be a reasonable likelihood of a counter-bid, for one or both of the parties, given accelerating consolidation in the industry".

Europe's Basic Resources index was a weak spot, down 0.9 percent, with big miners like Rio Tinto, Glencore and BHP Billiton all falling around 1 percent, tracking a decline in metal prices.

Among outstanding movers was Ultra Electronics, which rose as much as 10 percent to a record high after the British defence contractor reported its biggest sales growth in six years.

On the downside, Dormakaba fell 3 percent after Kepler downgraded the Swiss security group to hold. (Editing by Ed Osmond)

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