STOCKS NEWS EUROPE-Monte Paschi gains 4 pct on Goldman report

Shares in Banca Monte dei Paschi (Milan: BMPS.MI - news) di Siena (BMPS) rise more than 4 percent after Goldman Sachs (NYSE: GS-PB - news) raises its rating on the Italian lender to 'neutral' from 'sell' following the bank's decision to increase the size of its previously announced rights issue.

Goldman Sachs also removes Monte Paschi from its pan-Europe sell list.

"Today Goldman is fuelling the rise in the stock, which is always speculatively traded," a Milan-based trader says.

The board of the Siena-based bank on Friday approved a proposal to boost the size of a share sale it is planning to 5 billion euros ($6.9 billion) from 3 billion to help cover any gaps a Europe-wide bank check might find in its finances.

"Fundamentally, we see this move by BMPS as logical: our analysis indicates that the vulnerability of the bank's asset quality was relatively higher than that of its peers due to its lower starting capital position rather than to the structure of its loan book," Goldman says in a note.

By 0833 GMT, the stock is up 4 percent at 0.2524 euros, compared with a flat Italy's banking index.

Reuters messaging rm://claudia.cristoferi.thomsonreuters.com@reuters.net

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