UPDATE 1-Italy's antitrust extends Intesa share pact probe

* Says pact does not make Intesa, Cr Agricole independent

* Says pact allows for consultation on Intesa strategy

(Adds details, background, shares)

MILAN, July 3 (Reuters) - Italy's antitrust body said it is probing a new pact between Credit Agricole (CAGR.PA) and Assicurazioni Generali SpA (GASI.MI) on their stakes in Intesa Sanpaolo SpA (ISP.MI) after changes made to an original pact were deemed insufficient.

The authority is extending an investigation launched in mid-May to cover the pact agreed on June 25, the authority said. The two shareholders watered down a previous version in order to meet objections from the antitrust regulator.

However, "according to the antitrust the new agreement also ... does not meet conditions to guarantee the necessary independence between Credit Agricole and Intesa Sanpaolo and the role as a third party of the French bank," the regulator said in a statement on Friday.

The latest pact includes consultation on strategic issues between the two shareholders and allows them to reach these aims via members of the supervisory and management boards appointed by either shareholder, it said.

The antitrust authority's probe is looking into whether Intesa Sanpaolo has complied with the competition conditions set in December 2006 when it cleared the merger of Banca Intesa and Sanpaolo IMI to form Intesa Sanpaolo.

In particular, the conditions required shareholders not to set up share pacts and for Credit Agricole to sell down its Intesa stake to under 5 percent by Jan. 1, 2008, and to less than 2 percent this year.

Currently, Credit Agricole has a 5.8 percent stake and Generali 5.0 percent.

Earlier on Friday, Intesa Chief Executive Corrado Passera said the latest pact had been "a very important step" in the hoped-for direction and it was up to the antitrust to rule.

Intesa Sanpaolo shares closed up 1.11 percent at 2.28 euros, Generali was 0.21 percent at 14.57 euros.

(Writing by Nigel Tutt; editing by Simon Jessop)