European shares down as weak commodity stocks offset Telecom, Bayer gains

* Mining, energy stocks lead sectoral decliners

* Telecom Italia (Other OTC: TIAJF - news) rises after CEO steps down

* Bayer (LSE: 0P6S.L - news) up on possible Monsanto (Hamburg: 1132157.HM - news) interest for Bayer unit

* JP Morgan cuts euro zone equities to "neutral" (ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets for site in development. See the bottom of the report for more details. Adds closing prices)

By Sudip Kar-Gupta and Danilo Masoni

LONDON/MILAN, March 21 (Reuters) - European shares closed lower on Monday, with weaker commodity stocks more than offsetting gains in Bayer and Telecom Italia .

The pan-European FTSEurofirst 300 index fell 0.25 percent, while the euro zone's blue-chip Euro STOXX 50 index was down by 0.36 percent.

Telecom Italia rose 3.1 percent, among the top gainers on the FTSEurofirst, after the company confirmed its CEO was stepping down in a move seen as a sign of the growing influence of top shareholder Vivendi (LSE: 0IIF.L - news) .

Italian broker ICBPI said the resignation could fuel speculation about new cost-cutting at the Italian phone group.

Bayer's shares rose 3.3 percent after people familiar with the matter told Reuters that Monsanto, the world's largest seed producer, had approached Bayer to express interest in its crop science unit, including a potential acquisition worth more than $30 billion.

Mining and steel stocks such as ArcelorMittal (LSE: 0NSF.L - news) and Glencore (Xetra: A1JAGV - news) fell as metals prices steadied after reaching a four-month high in the previous session.

Softer oil prices also weighed on the shares of energy companies, while Tullow Oil (LSE: TLW.L - news) was impacted by a downgrade from investment bank Jefferies.

Shares (Berlin: DI6.BE - news) in Italy's Banco Popolare (Amsterdam: PB8.AS - news) rose 5.9 percent after its CEO said the bank and its rival Popolare di Milano were getting closer to meeting the conditions set by the European Central Bank for clearing a possible merger. Popolare di Milano rose more than 3 percent.

Some strategists remained cautious on the outlook for European stocks.

JP Morgan Cazenove downgraded euro zone equities to "neutral" from "overweight", citing headwinds on the region's stock markets from a weakening in the U.S (Other OTC: UBGXF - news) dollar.

"We reiterate our recent downgrade of Japan, and also downgrade Eurozone, from overweight to neutral. The region is still a crowded 'long', valuations are uninspiring, Euro is a headwind and ECB (European Central Bank) action is behind us," said JP Morgan strategist Mislav Matejka.

The FTSEurofirst 300 index remains down by around 7 percent since the start of 2016.

Today's European research round-up

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

If you have any thoughts, suggestions or feedback on this, please email mike.dolan@thomsonreuters.com.

Mike Dolan, Markets Editor EMEA.

(Reporting by Sudip Kar-Gupta and Danilo Masoni; Editing by Jeremy Gaunt and Gareth Jones)