Banca Monte dei Paschi di Siena : European shares shrug off four percent drop for Italian banks

Prime Minister Matteo Renzi resigned after a crushing defeat in a referendum on constitutional reform.

By 0830 GMT, the pan-European STOXX 600 <.STOXX> index was up 1.2 percent, quickly recovering from a small dip at the open. The mining sector index <.SXPP> topped sectoral gainers, up 2.3 percent, on the back of rising copper prices while healthcare stocks <.SXDP> rose 1.4 percent.

Italian banks <.FTIT8300> fell 4.2 percent, taking year-to-date losses to 50 percent for the world's worst performing banking sector. Monte dei Paschi di Siena (>> Banca Monte dei Paschi di Siena SpA) fell as much as 7 percent while Unicredit (>> UniCredit SpA) fell 4.8 percent.

The outcome of the Italian referendum raised doubts over whether Monte dei Paschi would go ahead with a vital cash call. Morgan Stanley said in a note this morning that state aid for the troubled lender looked increasingly likely.

(Reporting by Danilo Masoni)