European shares retreat from 11-month high, Actelion and Colruyt fall

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* STOXX Europe 600 index down 0.2 percent

* Actelion (LSE: 0QMN.L - news) slumps as J&J ends potential deal talk

* Colruyt (EUREX: 11884447.EX - news) falls after results

By Atul Prakash

LONDON, Dec 14 (Reuters) - European shares retreated from an 11-month high on Wednesday, with Switzerland's Actelion slumping after U.S. healthcare company Johnson & Johnson (NYSE: JNJ - news) ended discussions over a potential deal with Europe's largest biotech firm.

Actelion shares fell nearly 8 percent after J&J said it was not able to reach an agreement that it believed would create adequate value for its shareholders. J&J said in November it was in preliminary talks about a takeover of Actelion, then valued at about $20 billion.

The Wall Street Journal, citing people familiar with the matter, reported that Sanofi (LSE: 0O59.L - news) had filled the gap left by J&J and was now in talks with Actelion. Sanofi shares were down 1.7 percent.

Colruyt also put pressure on the broader market as its shares fell 8 percent after the Belgian supermarket group announced results late on Tuesday.

The pan-European STOXX 600 was down 0.2 percent, with healthcare and consumer staples sectors the biggest drags on the benchmark index.

Investors awaited a policy meeting of the U.S. Federal Reserve for hints about the market's near-term direction. A quarter point move is priced in, as are two more hikes next year. Any hint that the Fed may move more aggressively could affect various markets.

"Although there should be no surprises given the very much anticipated 25 basis points hike at today's meeting, the FOMC's accompanying statement and the Fed's dot plot will set the primary tone for the 2017 outlook for the U.S. monetary policy," said Ipek Ozkardeskaya, analyst at London Capital Group.

Italian banks remained choppy. After moving in and out of negative territory, the index was trading flat, giving up some of the strong gains seen in the previous session.

Rating agency Moody's changed its outlook on the Italian banking sector to 'negative' from 'stable' late on Tuesday due to increasing capital needs and weakening confidence.

Shares (Berlin: DI6.BE - news) in Monte dei Paschi (Milan: BMPS.MI - news) di Siena were earlier halted after rising more than 4 percent as the troubled Italian lender confirmed the European Central Bank had rejected its request for more time to raise capital. Its shares were last down 2 percent.

However, strong gains by some companies limited losses.

German retailer Metro (Dusseldorf: 62M.DU - news) jumped 5.2 percent, the biggest gainer in STOXX 600 index, after reporting better than expected fourth-quarter operating profit for the food and consumer electronics businesses it hopes to split in a demerger next year.

Mediaset (LSE: 0NE1.L - news) extended the previous session's 30 percent rally and was up 4 percent on Wednesday as top shareholder Fininvest and Vivendi (LSE: 0IIF.L - news) both raised their stakes in the Italian broadcaster. Mediaset shares have jumped more than 75 percent in about two weeks. (Editing by Andrew Heavens)