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* STOXX Europe 600 index up 1.1 pct
* UniCredit surges after capital boosting plan
* Takeover speculation powers Mediaset
By Danilo Masoni and Atul Prakash
MILAN/LONDON, Dec 13 European shares rose on
Tuesday, helped by a rally in Italy's biggest bank UniCredit
on plans to bolster its balance sheet, while takeover
speculation allowed Mediaset to make its best one-day gain ever.
Mediaset surged 31.9 percent, the biggest gainer in Europe,
after French media group Vivendi said it owned a 3
percent stake in the Italian broadcaster and planned to raise
that to as much as 20 percent, fuelling expectations of a
"This is just the first page of a new story," Mediobanca
analysts said in a note. "A group like Mediaset... is a corner
stone for everyone willing to set up a media platform, with
strong focus on southern Europe."
Shares in its Spanish arm Mediaset Espana rose 6
The pan-European STOXX 600 index climbed to a new
11-month high to end up 1.1 percent.
UniCredit rose 15.9 percent, its best day in more
than six years, after unveiling plans to raise 13 billion euros
in Italy's biggest-ever share issue to shore up its balance
sheet and shield itself from a broader banking crisis. Traders
said the rise was exacerbated by short covering.
UniCredit's move comes at a difficult time, with ailing
lender Monte dei Paschi di Siena at risk of failure, a
new government just installed in Rome and early elections
expected next year.
"It's a hard medicine to swallow, but UniCredit's move to
raise billions of euros and a restructuring programme would put
the bank in a much better shape," said Koen De Leus, chief
economist at BNP Paribas Fortis.
"Overall sentiment has improved on expectations that the new
government could support the banking sector and help Monte dei
Paschi raise capital from private investors. I hope they will
not waste this crisis and clean up their non-performing loans."
Italy's new prime minister Paolo Gentiloni said that his
government would be ready to take action to support the
country's troubled banking sector.
The surge in UniCredit shares helped Italy's banking index
rise 5.8 percent to its highest close since end
June, while Italy's blue chip index outperformed the
rest of Europe with a 2.5 percent rise.
Italian banks have been rallying since last week as
investors covered short positions on expectations that a
solution to rescue Monte dei Paschi would be found.
Investors were also keeping an eye on the Federal Reserve's
two-day policy meeting from Tuesday. It is widely expected to
hike rates for the first time in 2016, with markets pricing in a
nearly 100 percent chance of a quarter percentage point rise.
In focus will be the Fed's statement and economic
projections, which will be pored over for any sign of reaction
to political outsider Donald Trump's U.S. presidential election
Elsewhere, A. P. Moller-Maersk surged 4
percent. The world's biggest container shipper said it might
consider selling assets or cutting dividends as it seeks to
retain its credit rating.
(Additional Reporting by Agnieszka Flak and Stephen Jewkes;
editing by Richard Lough)