Fortis scraps sales, UniCredit under pressure

By Reed Stevenson and Jo Winterbottom

AMSTERDAM/MILAN (Reuters) - Belgian bank Fortis scrapped $4 billion of asset sales on Wednesday and UniCredit's head said he would not resign as damaging waves of the credit crisis lapped at Europe's banks.

Fortis (FOR.BR) (FOR.AS), rescued by an 11 billion euro bailout on Sunday, scrapped a 2.15 billion euro deal to sell half its asset management arm to Ping An Insurance (2318.HK) and was blocked by regulators from selling 709 million euros of ABN AMRO assets to Deutsche Bank (DBKGn.DE).

UniCredit Chief Executive Officer Alessandro Profumo told Italy's TG1 television he was staying at the bank, whose shares lost nearly 25 percent of value in two trading sessions this week on worries over its financial strength.

"I am here and I am absolutely not resigning," Profumo said.

UniCredit (CRDI.MI), Italy's second biggest bank, said earlier on Wednesday it was selling some property and improving risk-weighted assets to boost a key capital ratio.

The comments failed to calm investors, spooked when Profumo stepped away from confirming targets on Tuesday, and its shares initially tumbled.

But they recouped losses and ended higher after Italian regulators stopped short-selling and Prime Minister Silvio Berlusconi said he would not tolerate speculative attacks on the country's banks.

"I will not permit Italian citizens to lose even a single euro on their deposits," Berlusconi said before crisis talks between Germany, France, England and Italy this weekend.

UniCredit shares closed up 11.09 percent at 2.886 euros.

"After my government's intervention, UniCredit went from 7 percent losses to 7 percent gains," Berlusconi said.

There were deals elsewhere among European banks, continuing the frenzied activity in the sector.

Iceland's Straumur-Burdaras STRB.IC said it would pay 380 million euros ($537 million) to buy assets from Landsbanki LAIS.IC, just days after the part-nationalization of smaller rival Glitnir GLB.IC to prevent it going bust.

Banks are grappling with frozen funding markets and intense pressure on their balance sheets, prompting state bailouts and other rescue deals for the most troubled lenders.

Optimism that U.S. politicians will salvage a $700 billion rescue deal for financial firms later on Wednesday underpinned most European bank stocks, and the DJ Stoxx European banks index .SX7P gained 3.05 percent.

FORTIS JUMPS