* STOXX down 0.1 pct
* Monte Paschi slumps as cash call starts
* Danone falls after sales growth warning
* Drax Group jumps after upgrade
(Adds detail, updates prices at close)
By Kit Rees and Danilo Masoni
LONDON, Dec 19 European shares retreated from
11-month highs on Monday with Italy's Monte dei Paschi
leading banks lower on worries over a cash call, and Danone
hit after the world's biggest yoghurt maker warned
about sales growth.
The STOXX 600 was down 0.1 percent at its close,
pulling back after ending at its highest level since Jan. 5 on
Friday. Traders said volumes could remain low and trading become
choppy as the year-end holiday season approached.
The pan-European index has gained around 6 percent in the
last two weeks, boosted by a rally in banking stocks on
expectations that rising bond yields would ease margin pressure,
and helped by a stronger dollar.
Banks were the biggest sectoral faller on Monday, as
investors took profit and expressed caution over whether
troubled Monte dei Paschi - down 11 percent on Monday - would be
able to complete a 5 billion euro capital increase.
"A successful completion of the transaction would be really
surprising," JCI Capital portfolio manager Alessandro Balsotti
said, adding that the bank may just be trying to gain time for a
state aid decree to be finalised.
Monte dei Paschi, which is burdened by a mountain of bad
debt, needs to complete the share sale by the end of the year to
avoid a state bailout. The bank will offer the new shares
between Monday and Thursday.
Italy has said it is ready to step in to rescue the
country's third-largest bank should the fundraising plan fail.
Elsewhere in the banking sector, Deutsche Bank
fell 4.5 percent, UniCredit was down 4.5 percent and
Barclays fell 2.7 percent.
Danone fell around 1.4 percent. The French food
group said it expected its 2016 sales growth slightly below its
original targets due to a weaker-than-expected performance at
its European dairy business.
"Danone's warning... should not have much impact on EPS
(earnings per share) forecasts for 2016 but will undermine
confidence in management's ability to deliver," said RBC Capital
Markets analyst James Edwardes Jones, keeping an "underperform"
rating on the stock.
Among gainers was Drax Group, Britain's largest coal
power producer, which jumped more than 8 percent after an
upgrade from SocGen to "buy".
(Reporting by Kit Rees and Danilo Masoni; editing by Mark