European shares steady as firmer banks offset weaker miners

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* STOXX Europe 600 index little changed

* Miners among top decliners

* Italian banks rebound after recent drops

By Atul Prakash

LONDON, Nov 29 (Reuters) - European shares steadied on Tuesday after finishing lower in the previous session, with banks stronger but miners down on a fall in industrial metals prices.

The European basic resources index was down 1.2 percent, the top sectoral decliner, as prices of major industrial metals fell by 1 to 2.2 percent after recent strong gains. The oil and gas index also fell and was last quoted 0.8 percent lower.

Shares in Antofagasta, BHP Billiton, Rio Tinto and Anglo American fell by 1.7 to 3.4 percent following a 1.2 to 2.1 percent drop in prices of copper , aluminium and nickel.

The pan-European STOXX 600 index was up 0.02 percent as of 1022 GMT. It closed 0.8 percent lower in the previous session, weighed down by a drop in banks led by Italian lenders on worries over a cash call at Monte dei Paschi.

However, the Italian banking index rose 2.7 percent after ending nearly 4 percent down in the previous session.

Even after today’s recovery, the index is still down around 15 percent from its levels two weeks ago as Italy prepares for a referendum on constitutional reforms on Dec. 4.

“Looking at today’s moves, it seems that some investors are considering the recent sell-off in Italian banks as overdone. It could be some last minute portfolio adjustments ahead of the referendum,” Peter Dixon, economist at Commerzbank, said.

“It’s important to analyse the recent trend than just looking at today’s moves. All those uncertainties related to the Italian referendum still exist. We will take a very cautious view on the country’s banking sector.”

The chief executive of the Italian stock exchange said that big international investors were holding huge short positions on Italian assets. Opinion polls conducted until a blackout period began last week showed the “no” vote for the referendum comfortably in the lead, raising concerns of a political crisis and fuelling market volatility. Prime Minister Matteo Renzi has said he would resign if Italians reject the reforms.

Elsewhere, Swiss biotech firm Actelion fell 4.6 percent, the top decliner in the STOXX 600 index, on a report saying the company was not actively considering selling itself, but instead weighing a “complicated deal” to link with Johnson & Johnson.

TalkTalk rose 4.2 percent, rebounding off 4-year lows, after Britain’s telecoms regulator said it will go to the European Commission to try to force BT to legally separate from Openreach, the network that delivers broadband to millions of homes and businesses.

Openreach is the division of BT Group that develops and maintains the UK’s main telecoms network used by telecom providers such as Sky, TalkTalk, Vodafone and BT’s retail business. (Editing by Jason Neely)