July 4, 2016 / 8:22 AM / 2 years ago

Miners prop up European shares but post-Brexit rally loses momentum

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* Pan-European index STOXX 600 down 0.1 percent,

* Miners rise as China stimulus hopes lift copper prices

* Banks among top losers, Deutsche Bank drops

* Monte dei Paschi touches record low on reported ECB request

By Danilo Masoni

MILAN, July 4 (Reuters) - European shares were little changed on Monday with gains among mining stocks on the back of stronger metal prices offset by weakness in the battered banking sector.

The pan-European STOXX 600 index was 0.1 percent down by 0806 GMT, after gaining 7.6 percent in the past four sessions, and the FTSEurofirst 300 was up 0.05 percent.

Stocks rose last week on hopes that the European Central Bank would step in to support markets, easing concerns over any fallout from Britain’s decision last month to leave the EU.

Both indexes, however, remain below levels reached before the shock UK vote, which triggered worries about the political and economic outlook for Europe, weighing on peripheral countries and financial stocks.

Some investors expected caution to prevail in the near term with strategist at JP Morgan Cazenove saying they did not expect the market recovery to last for much longer.

“Market internals are not encouraging, political uncertainty will linger and activity momentum is likely to take a hit,” they said in a note.

Trading was likely to remain thin on Monday as U.S. markets would be closed for the Independence Day holiday.

Europe’s STOXX 600 Basic Resources index, which contains major mining stocks, was the biggest sectoral gainer, up 2 percent, as copper prices rose with the market climbing to a two-month top on expectations of stimulus measures in top consumer China.

Shares such as Rio Tinto, Anglo American and BHP Billiton were all up by 1.7 percent to 3 percent.

Shares of precious metals miners advanced to new highs, tracking gains in gold and silver prices, with Randgold Resources climbing to a record high and Fresnillo at its best level since late 2012. [nL9N14P026

Europe’s STOXX 600 Bank index fell 1.4 percent, led lower by Italian lenders which fell after Italian Prime Minister Matteo Renzi’s spokesman said the country had no plans to defy EU rules by pumping public money into its banks, denying a repot in the Financial Times.

Monte dei Paschi di Siena fell more than 7 percent to a touch fresh record lows with traders citing a report which said the European Central Bank had asked for more aggressive action to sell bad loans.

Deutsche Bank fell 2.3 percent after Exane BNP cut its price target on the stock by 17 percent to 10 euros. (Reporting by Danilo Masoni; additional reporting by Sudip Kar-Gupta in London)

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