European shares fall, banks knocked by Italy jitters

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* Pan-European STOXX index down 0.8 pct

* Italian banks fall on Monte Paschi cash call worries

* Oil sector falls with crude prices choppy

* Utilities outperform, led by Endesa (LSE: 0N9G.L - news)

By Danilo Masoni and Alistair Smout

MILAN/LONDON, Nov 28 (Reuters) - European shares fell on Monday, weighed down by a drop in banks which were led lower by Italian lenders which hit their lowest point since end-September on continued worries over a cash call at troubled lender Monte dei Paschi (Milan: BMPS.MI - news) .

The pan-European STOXX Europe 600 index was down 0.8 percent at 339.83 by the close. The regional bank index closed down 1.8 percent, the biggest sectoral faller.

Italian banks fell 3.9 percent, hitting an 8-week low, on continued doubts over Monte dei Paschi's ability to execute a 5 billion euros capital cash call.

Investors fear that a failure of the capital raising could heighten worries over the whole Italian banking system, adding to pessimism over political stability ahead of Sunday's referendum on constitutional reform.

"Uncertainty (on Monte Paschi) remains very high," said JCI Capital (Other OTC: CGHC - news) portfolio manager Alessandro Balsotti, who said that sentiment could brighten if the bank finds an anchor investor.

The main Italian stock index dropped 1.8 percent, the stand-out underperformer among major European indexes.

Monte dei Paschi was suspended for excessive volatility after a drop of more than 12 percent, and ended down 13.8 percent, while the country's strongest bank Intesa Sanpaolo (Amsterdam: IO6.AS - news) lost 3.2 percent.

Banks, which had benefited from a rally in U.S. treasury yields following Donald Trump's victory in the race for the White House, were broadly lower as U.S. treasury yields pulled back from a 16 month highs.

The oil & gas index also dropped as major oil producers convened in Vienna for an OPEC meeting later in the week.

Shares (Berlin: DI6.BE - news) in oil majors Total (LSE: 524773.L - news) , Royal Dutch Shell (LSE: 0LN9.L - news) and Eni (LSE: 0N9S.L - news) fell in early trade, reacting to steep losses in oil prices late on Friday and on Monday morning.

However, the sector ended off of lows, down 0.6 percent, after Brent crude turned sharply higher when Iraq's oil minister said the country was looking to co-operate on a deal to cut output.

Financial services firms also suffered in the risk-off mood. Aberdeen Asset Management (Frankfurt: 899502 - news) ended lower despite better-than-expected results.

It had risen over 5 percent in early deals, but ended 4 percent lower as traders cited a cautious outlook for the British asset manager which continues to suffer outflows.

Man Group (LSE: EMG.L - news) also fell, down 4.6 percent, after the stock was downgraded by Exane BNP Paribas to neutral, though London-listed lender CYBG (Frankfurt: 42YA.F - news) rose 3 percent, helped by an upgrade to "buy" from Goldman Sachs (NYSE: GS-PB - news) .

Utilities, which had suffered from risings global bond yields becasuse that makes their dividends relatively less attractive, outperformed. The sector index was up 0.4 percent, with Endesa underpinned by a price target upgrade at Credit Suisse (IOB: 0QP5.IL - news) .